What Happened
- The US administration is reportedly weighing selective adjustments to its Section 232 steel and aluminium tariffs, currently set at 50% on imports from nearly all trading partners (raised from 25% in June 2025).
- The tariffs were expanded in 2025 to cover not only primary steel and aluminium but also derivative products containing these metals, significantly broadening their scope.
- The UK is the sole exception, facing 25% tariffs with a tariff-rate quota exempting certain quantities.
- Economists and trade analysts note that the cost of tariffs is overwhelmingly borne by domestic importers and ultimately consumers, not the exporting countries.
- The tariff escalation has affected downstream industries including construction, automotive manufacturing, and appliance production through higher input costs.
Static Topic Bridges
Section 232 of the Trade Expansion Act, 1962
Section 232 of the Trade Expansion Act, 1962, authorizes the US President to impose tariffs or other trade barriers if the Department of Commerce finds that certain imports threaten national security. The provision was rarely used historically. Between 1962 and 1995, the US initiated 24 Section 232 investigations, finding national security threats in only eight cases (seven involving petroleum, one involving machine tools). The provision was not invoked between 1982 and 2017. President Trump invoked Section 232 in March 2018 to impose 25% tariffs on steel and 10% on aluminium imports, marking its first significant use in decades.
- Trade Expansion Act enacted: October 11, 1962
- Section 232 investigations (1962-1995): 24 initiated, 8 found threats
- First Trump-era Section 232 tariffs: March 8, 2018 (25% steel, 10% aluminium)
- Current rate (since June 2025): 50% on steel and aluminium from nearly all partners
- Scope expanded in 2025 to include derivative products
Connection to this news: The possible scaling back of tariffs reflects a recognition that the national security rationale has significant economic trade-offs, as domestic industries dependent on steel and aluminium as inputs face elevated costs that reduce competitiveness.
Theory of Tariff Incidence: Who Pays
In international trade economics, tariff incidence refers to the distribution of the economic burden of a tariff between domestic consumers and foreign producers. Standard economic analysis, supported by empirical studies of the 2018 US tariffs, shows that tariffs are primarily paid by domestic importers, who pass the costs to downstream businesses and consumers through higher prices. A 2019 study by economists Amiti, Redding, and Weinstein found that US tariffs were "almost completely passed through into US domestic prices," meaning foreign exporters did not lower their prices to absorb the tariff.
- Tariff incidence: The distribution of tariff burden between domestic and foreign parties
- Key finding: US importers bore nearly 100% of the 2018 tariff cost
- Impact channels: Higher input costs for manufacturers, higher consumer prices, reduced competitiveness
- Deadweight loss: Tariffs create economic inefficiency by distorting production and consumption decisions
- Effective rate of protection: Measures tariff protection on value added, not just final product price
Connection to this news: The question of "who foots the bill" is central to evaluating tariff policy, as the evidence strongly suggests that US consumers and businesses, not foreign exporters, bear the primary burden of Section 232 tariffs.
India's Steel and Aluminium Trade with the US
India is the world's second-largest producer of crude steel (over 140 million tonnes annually) and a significant aluminium producer. India's steel and aluminium exports to the US have been affected by Section 232 tariffs since 2018. In retaliation, India imposed retaliatory tariffs on 28 US products in June 2019, including almonds, walnuts, and apples. These retaliatory tariffs were subsequently rolled back as part of the broader India-US trade negotiations. India's own tariff structure applies customs duties on steel imports to protect domestic manufacturers.
- India's crude steel production: Over 140 million tonnes per year (world's 2nd largest)
- India's retaliatory tariffs (June 2019): 20% additional duty on 28 US products
- India's retaliation rolled back: Part of 2026 trade deal framework
- National Steel Policy 2017: Target of 300 million tonnes capacity by 2030
- India's aluminium production: ~4 million tonnes annually (world's 4th largest)
Connection to this news: Any US recalibration of steel and aluminium tariffs directly affects Indian exporters, while the broader India-US trade deal negotiations aim to resolve the cycle of tariffs and retaliatory measures that has characterized the bilateral trade relationship since 2018.
Key Facts & Data
- US Section 232 tariffs (current): 50% on steel and aluminium from nearly all countries
- Section 232 authority: Trade Expansion Act, 1962
- First imposed under Trump: March 2018 (25% steel, 10% aluminium)
- Escalated: June 2025 to 50%, expanded to derivative products
- India's crude steel production: 2nd largest globally (140+ million tonnes/year)
- Economic consensus: Tariff cost overwhelmingly borne by domestic importers and consumers
- UK exception: 25% rate with tariff-rate quota