The move is a retaliation to Washington imposing in March a 25 per cent duty on certain steel products and 10 per cent on aluminium products, which will help the United States collect $241million.
"It's some bit of posturing and some amount of negotiation will happen", Abhishek Jain, Tax Partner at EY India said.
India has made a decision to suspend concessions on 30 products originating from the United States. In a notification to the World Trade Organisation (WTO) on June 14, India emphasised that the tariffs will be substantially equivalent to the amount of trade affected due to the US' measures.
"Our estimates place a combined $240 million loss for India on account of Mr. Trump's steel, aluminium tariffs and we felt a reciprocal tariff of a similar amount on U.S. imports would be fair", a senior commerce ministry official told the Business Standard newspaper.
The move is significant as it comes a day after Commerce Minister Suresh Prabhu returned from the US and just weeks ahead of further talks between the two countries on the issue.
However, the trade path connecting the "strategic allies" has been eroding over the past few months, as the Trump administration accused India of unfair trade practices. Earlier in May, India proposed to raise duties by up to 100 per cent on 20 products such as almonds, apple and specific motorcycles imported from the United States. "India reserves its right to further suspend substantially equivalent concessions and other obligations based on the trade impact resulting from the application of the measures of the USA", it added. India primarily sells pearls, pharmaceuticals, chemicals, and textiles to the U.S., and imports nuclear reactors, machinery, mineral fuels, and oil among other products.
Hope for reconciliationTrade representatives from both the United States and India are set to meet at the end of June to address a number of trade-related issues, including agricultural subsidies and increased tariffs on certain goods.
In March, the U.S. imposed 25 percent duty on certain steel products and 10 percent on aluminium products, which will help the USA collect 241 million dollars of duty.
Trump signed two proclamations that levied a 25 per cent tariff on steel and a 10 per cent tariff on aluminium imported from all countries except Canada and Mexico. The EU is right now proposing additional tariffs on United States imports worth a modest $4.5 billion.
As the USA goes ahead with its plan to increase duties on certain steel and aluminium products, it is put a burden on $241 million on India. In retaliation, the Asian nation's Ministry of Commerce has said an equal tariff on USA goods would be imposed.