US Tariff Hike Threatens India’s $1 Billion Aluminium Exports

The US is India’s largest market for aluminium exports, with shipments valued at $946 million in 2023-24. However, the Trump administration has raised aluminium tariffs from 10% to 25%, effective March 12, which could impact Indian exporters. While India supplies only 3% of total US aluminium imports, it is the largest supplier of aluminium conductors, a key product in the power sector. The US accounts for 12% of India’s aluminium exports, making it an important market for companies in this sector. In 2023, Indian aluminium conductor exports to the US peaked at $261 million due to rising infrastructure demand.

Other major aluminium exports include unwrought aluminium, nails, fasteners, and wires. The 2018 tariffs on steel and aluminium had limited impact due to exemptions for several countries, but India did not receive any exemptions and still grew its exports. The new tariffs are broader, potentially affecting the aluminium industry more than steel. India exports 40% of its aluminium production, with 6-8% going to the US, making the tariff hike a significant concern. Meanwhile, India’s steel exports to the US are smaller, but excess steel from China, which is also facing tariffs, could flood the Indian market and impact prices. The latest tariffs cover not just raw materials but also finished products, adding further challenges for Indian exporters.

US Tariff Hike Threatens India’s $1 Billion Aluminium Exports

The United States has been the top destination for India’s aluminium exports, but new tariffs introduced by the US government could disrupt this trade. In the financial year 2023-24, India exported aluminium worth $946 million (Rs 7,831 crore) to the US, slightly below the $1 billion mark achieved in the previous two years. Recently, the Trump administration announced an increase in tariffs on aluminium imports, raising them from 10% to 25%, effective March 12.

This decision is expected to impact Indian exporters, particularly since the US is the largest buyer of India’s aluminium conductors—wires and cables used in electrical systems. Although India supplies only 3% of the total aluminium imported by the US, it remains the world’s second-largest aluminium producer after China.

The new tariffs are broader in scope than those imposed in 2018, covering a wider range of aluminium products. While this could slow growth for some Indian exporters focusing on the US market, the overall impact may be limited, as aluminium exports contribute only a small portion of most Indian companies’ revenues. Currently, the US accounts for about 12% of India’s total aluminium exports.

In 2024, Indian aluminium conductors made up nearly 38% of US imports in this category, valued at $130 million. The highest import level was recorded in 2023, reaching $261 million—a sharp rise from just $40 million in 2021. The growing demand for these conductors in states like California, Texas, Nevada, and Arizona has been driven by infrastructure development and power grid upgrades.

Apart from conductors, the US also imports other aluminium products from India, such as unwrought aluminium ($185 million in 2024), nails and fasteners ($107 million), and wire ($98 million). Additionally, India supplied 26% of the aluminium tube and pipe fittings imported by the US in 2024, worth $16 million.

In 2018, the Trump administration introduced a 25% tariff on steel and a 10% tariff on aluminium imports. However, exemptions granted to some countries reduced the overall effectiveness of these tariffs. The White House recently stated that these exemptions weakened the impact of the tariffs, leading to the decision to enforce stricter measures. Unlike Canada, Mexico, and the EU, India did not receive any exemptions. Despite this, India’s aluminium exports to the US continued to grow.

The new tariffs are likely to have a greater impact on the aluminium industry compared to the steel industry. India exports around 40% of its aluminium production, with 6-8% going directly to the US. As a result, Indian manufacturers may experience a decline in export volumes and reduced earnings due to the higher tariffs.

For the steel industry, the direct impact might be smaller, as only 4% of India’s steel exports went to the US in 2024. However, an indirect effect could arise if China, which is also facing these new tariffs, redirects its excess steel to the Indian market, potentially affecting local steel prices.

In 2023-24, the US was the sixth-largest buyer of India’s iron and steel, with imports worth $476 million (Rs 3,935 crore). However, it was the largest market for steel products, with exports reaching $2.8 billion (Rs 23,128 crore). Like aluminium, the new US tariffs now extend beyond raw steel to finished products, posing additional challenges for Indian exporters.

In summary, while the new tariffs may create hurdles for Indian aluminium and steel exporters, the overall impact could be limited due to the relatively small share of exports to the US. However, the situation requires close monitoring, especially if China redirects its steel exports to India, potentially disrupting the local market.