Indian steelmakers are staring at a glut after US President Donald Trump this week ordered 25% tariffs on all steel and aluminum imports into his country effective from 12 March, with no exemptions.

Higher tariffs in the US will drive global steel to India, the only major market without trade restrictions, and other countries, while there is unlikely to be a structural impact on profitability at Hindalco, India’s primary aluminum producer, analysts and key stakeholders said.

The tariff on steel is expected to slash exports to the US by 85%, creating a massive surplus that will likely flood India, Naveen Jindal, president of the Indian Steel Association, said in a statement.

The Indian Steel Association comprises major public and private sector steel enterprises, accounting for about 65% of the country’s crude steel production.

Jindal, who is also chairman of Jindal Steel and Power Ltd,  said that with the US shutting its doors to global steel, the surplus will inevitably be redirected to India, threatening its domestic industry with market distortions, price crashes, and unfair competition.

Jindal has appealed to the government for urgent diplomatic action to push for the removal of longstanding antidumping duty and  countervailing duty, and secure exemptions from restrictive measures.

ISA is “deeply concerned” about the US decision to impose tariffs on steel imports, which will further disrupt global trade and intensify challenges for the steel industry, the statement said.

“The US, a major steel importer, has historically imposed strict trade restrictions, with over 30 remedial actions in force against Indian steel—some for more than three decades,” Jindal said in the statement.

While India’s carbon steel exports to the US are already negligible due to longstanding duties, the tariffs will “only add to the misery and further aggravate the situation,” the statement added.

Minimal hit to Hindalco

The scarcity of scrap, a key raw material for aluminum producers, is increasing due to heightened imports by China, which in turn is pressuring spreads as the cost of raw materials continues to rise, Nuvama Institutional Equities said in a report.

However, Nuvama believes it has bottomed out and remains more profitable to produce via scrap compared with aluminium slabs or primary metal.

“The impact of imposing import tariff by the US government, if it happens, will be offset by increase in Midwest premiums,”it said. The Midwest Premium reflects the additional value of having aluminum supplied directly to locations across the Midwest, US, when and where it is needed, based on local supply and demand.

“Hence, we do not see any structural impact on profitability due to tariff hikes, if any,” the brokerage added.

If India and other countries impose a 25% tariff on steel and aluminum products from the US, it would hurt American manufacturing and exports,” Ajay Srivastava, founder of New Delhi-based think tank Global Trade Research Initiative, said.

India, particularly, shows a trade deficit in these sectors, importing $784.09 million in iron and steel versus $459.95 million exported, and $831.97 million in aluminum and its products compared with $783.35 million exported, Srivastava said, citing Directorate General of Commercial Intelligence and Statistics data for 2024 calendar year.

Higher tariffs would make US exports less competitive, benefiting suppliers such as China, Japan, South Korea, Vietnam, and Indonesia. If more countries impose similar tariffs, US exports would struggle globally. India need not take any action and wait for more of Trump’s action to unfold, Srivastava added.