Introduction

The global steel and aluminium industry faces significant disruptions as the United States imposes tariffs on these key commodities. With the announcement of a 25% tariff on steel and aluminium imports into the U.S., there is considerable concern among global exporters. However, India and China are poised to remain relatively insulated from these changes, thanks to their diverse export markets and trade strategies. While the U.S. action will undoubtedly impact over half of the 121 countries involved in the global steel and aluminium trade, India and China’s broader and more diversified trading patterns help mitigate the adverse effects. In this blog, we will explore why India and China are better positioned compared to other nations and how this tariff situation could reshape the global market dynamics.

The U.S. Tariffs on Steel and Aluminium

In February 2025, the United States, under President Donald Trump's administration, imposed a 25% tariff on steel and aluminium imports. This decision was a part of broader protectionist measures aimed at bolstering the domestic steel industry and reducing foreign competition. The tariffs are set to affect nearly 10% of global trade in steel and aluminium and will influence more than half of the 121 countries that participate in this export market.

For many nations that rely heavily on the U.S. as a trading partner, these tariffs could result in substantial losses. However, India and China, two of the largest global exporters of steel and aluminium, are likely to weather the storm with far less impact.

Why India and China Are Less Vulnerable

India and China stand out in the global steel and aluminium export market for their diversified trade portfolios. Diversification is key in insulating countries from the adverse effects of tariffs or trade disruptions. When a country exports to a wide range of markets, it is less dependent on any single trade partner, making it more resilient to changes in international trade policies.

India's Diversified Export Markets

India’s steel and aluminium export markets are some of the most diverse in the world. According to a Moneycontrol analysis, India’s top 10 trading partners account for only 55% of its total steel and aluminium exports, significantly lower than the global average of 86.5%. This means that while the U.S. is an important destination for Indian steel exports, it is not a dominant one. In 2023, the U.S. accounted for only 7.5% of India’s steel exports, suggesting that India’s exposure to U.S. tariffs is limited.

Additionally, India’s exports are spread across a wide range of countries. In 2023, Italy, South Korea, and Malaysia were among the top destinations for Indian steel, with Italy receiving over 10% of total exports, while South Korea and Malaysia accounted for 6.7% and 6.2%, respectively. These diversified markets provide India with a cushion against the U.S. tariffs, as demand in these regions may increase in response to a reduction in U.S. imports.

China's Market Position

China, the world’s largest producer and exporter of steel, is similarly well-positioned in this scenario. Unlike India, however, China’s total export volume to the U.S. is minimal, with only 4% of its steel exports headed to the U.S. in 2023. This low reliance on the American market shields China from the brunt of the U.S. tariffs, enabling it to redirect its products to other regions.

In fact, China’s global steel exports are diversified across numerous markets, which makes it less reliant on any single country. This diversified approach allows China to absorb potential losses from the U.S. tariffs by expanding its presence in other markets, particularly in Asia and Europe, where steel demand remains strong.

Global Trade Diversification: The Key to Resilience

A key factor in both India’s and China’s ability to avoid severe consequences from the U.S. tariffs is their trade diversification strategies. While the global average for the top 10 trading partners accounting for a country’s exports is 86.5%, both India and China have lower exposure to a concentrated set of markets. This is significant in an era of increasing trade barriers and tariffs, as countries that rely too heavily on a single market are more vulnerable to changes in trade policy.

For instance, in the case of India, the U.S. is not the dominant export market. The data suggests that India exports only a small percentage of its steel and aluminium products to the U.S., which is a relatively low-risk situation compared to countries whose economies are heavily dependent on the U.S. market. On the other hand, India counts on European markets, such as Italy, and Asian markets like South Korea and Malaysia, to balance its export portfolio.

Impact on Other Exporting Nations

While India and China are relatively insulated from the U.S. tariffs, many other countries are facing more significant challenges. For example, the U.S. is the top trading partner for many smaller steel-producing nations. In these countries, the U.S. typically accounts for a substantial share of total steel exports. For countries like Brazil, Canada, and Mexico, where the U.S. is a dominant trading partner, the new tariffs will have a much more substantial impact.

According to the Moneycontrol analysis, the U.S. is the top trading partner for 63 of the 121 countries involved in steel and aluminium exports. For these countries, the tariffs will have a direct and often painful economic effect, as they could lose a significant portion of their export revenue. In some cases, the tariffs may encourage these countries to seek alternative markets or negotiate trade deals with other nations to offset the losses.

Furthermore, the U.S. is the second-largest trading partner for countries like India, with 14.2% of total exports directed to the U.S. For these nations, the impact of the tariffs is less severe than for countries with the U.S. as their top trading partner, but still significant.

Long-Term Effects on Global Steel and Aluminium Markets

The long-term impact of the U.S. tariffs on the global steel and aluminium market will depend on how countries adapt to the changing trade environment. While some nations may face immediate losses, others, like India and China, may see new opportunities for growth in alternative markets.

For example, as U.S. tariffs make it more expensive to import steel, countries like India and China could increase their market share in regions that are currently dependent on U.S. steel imports. The shift in global trade flows could lead to stronger demand for Indian and Chinese steel in Europe, the Middle East, and Southeast Asia. As these nations look for alternatives to U.S. steel, they may increasingly turn to suppliers in India and China, who can meet the demand at competitive prices.

Conclusion

The U.S. tariffs on steel and aluminium represent a major shake-up for the global steel market, but India and China appear to be relatively safe from the worst effects of these changes. Both nations have diversified their export markets, which reduces their reliance on any single trading partner. While smaller and more dependent exporters may face significant challenges, India and China are in a strong position to weather the storm and potentially benefit from the shifting dynamics of the global market. As the global trade landscape continues to evolve, diversification will remain a crucial strategy for mitigating the impact of tariffs and trade disruptions.