The simmering tensions between India and the United States have flared into open confrontation at the World Trade Organization, with New Delhi proposing retaliatory tariffs to counter Washington’s controversial 25% duty on automobiles and auto parts.
In an official notification to the WTO, India argued that the US measure threatens to impact $2.89 billion worth of its auto exports. The document states that India “reserves the right to suspend concessions or other obligations” of a value substantially equivalent to the harm inflicted on its trade.
According to the Indian submission, the United States stands to collect approximately $725 million in additional duties from these exports. In response, New Delhi plans to impose an equivalent amount in duties on American goods. However, India has not yet specified which US products will be targeted or the exact tariff rates it will levy.
This move signals India’s readiness to retaliate if ongoing trade negotiations with the United States collapse. The two countries are racing against a July 9 deadline set by US President Donald Trump, who has threatened to impose a punitive 26% tariff on all imported Indian goods if no deal is reached by then.
Trade analysts warn that such a dramatic escalation risks pushing the world’s two largest democracies into a full-blown trade war. While India has shown willingness to lower some of its notoriously high import tariffs to accommodate US demands, it has steadfastly resisted opening its politically sensitive agriculture and dairy sectors to American competition—an issue Washington insists must be part of any agreement.
The standoff comes at a delicate moment for both economies. India’s booming automotive sector is a key export earner and employer, while the US industry has been aggressively lobbying for protective tariffs. Trump’s administration argues that its 25% duty is necessary to protect American manufacturing jobs, but critics say it amounts to a blunt trade barrier that unfairly penalizes partners like India.
By formally notifying the WTO of its intent to impose retaliatory tariffs, India is making clear it will not accept these measures without a fight. The development highlights the fragility of the ongoing trade talks and the stakes involved as the July 9 deadline looms large over one of the world’s most important bilateral trading relationships.