Trade talks on, but India responds to Trump tariffs on auto with a ‘right’ to retaliate at WTO

India has formally notified the World Trade Organisation (WTO) of its intention to impose retaliatory duties on the United States in response to Washington’s 25% tariffs on automobiles and certain auto parts.

According to the notification, the American measures are expected to impact approximately $2.89 billion worth of Indian exports, prompting New Delhi to claim its right to suspend equivalent trade concessions.

“India reserves the right to suspend concessions or other obligations… that are substantially equivalent to the adverse effects of the measure to India’s trade,” the statement submitted to the WTO read.

While the Indian government has not yet detailed the specific tariff rates or the list of U.S. goods to be targeted, it has indicated that the retaliation would match the estimated $725 million in duties the US will collect annually from these measures.

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The development comes amid ongoing efforts by both nations to conclude a trade deal before a July 9 deadline set by US President Donald Trump. Trump has warned that if no agreement is reached, a sweeping 26% tariff could be imposed on all Indian imports.

India has expressed willingness to reduce some of its high tariffs for American goods but has held firm on sensitive sectors like agriculture and dairy, where it has resisted Washington’s demands for wider market access.

The move was detailed in a WTO Council for Trade in Goods meeting, where India stated that it intends to suspend certain trade concessions and obligations under various WTO provisions.

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The US imposed the 25% tariff on March 26, applying it to imports of passenger cars, light trucks, and select automobile components. These duties, which took effect from May 3, 2025, will continue indefinitely.

India maintains that these US tariffs amount to safeguard measures, a trade tool typically used to protect domestic industries from import surges. However, New Delhi has pointed out that Washington has not formally registered the measures as safeguards with the WTO—a requirement under international trade rules.

According to India, the US action violates the General Agreement on Tariffs and Trade (GATT) 1994 and the WTO’s Agreement on Safeguards. Since Washington has not responded to India’s call for consultations, New Delhi has now exercised its right to seek compensation through retaliatory trade measures.

This isn’t the first time India has used this approach. Earlier in March, it adopted similar retaliatory measures in response to US tariffs on Indian steel and aluminium exports.

India’s latest move highlights its intent to defend its trade interests at the multilateral level even as it engages bilaterally to resolve differences with the United States.

With inputs from agencies