India-US Trade Deal: Sectors that may still continue to face tariffs under Section 232

India and the US announced a historic trade deal on Monday night, paving the way for the existing 50% tariffs on exports to be brought down to 18%.

While the deal will bring benefits to a host of sectors with exposure to the US market, such as the textile space, shrimp feed exporters, Gems and Jewellery companies, among others, there could still be some sectors that may continue to face tariffs as they fall under the ambit of Section 232.

As has been the case with other countries that earlier signed the trade deal with the US, the products which fall under Section 232 of the Trade Expansion Act, 1962, have not changed in terms of tariffs being levied.

India too has exposure to sectors who fall under the Ambit of the Section 232 tariffs and they may continue to see tariffs. According to available data, one-tenth of India's exports or over $8 billion worth of exports may still face higher tariffs.

Sectors that fall under the ambit of Section 232 include Automobiles, Steel, Aluminium, Timber, Copper and trucks & ships. They continue to remain under Section 232 due to national security reasons.

According to the UN COMTRADE data, autos form the biggest exposure to this Section 232 with shipments worth nearly $4 billion falling under the national security lens. Steel exports were worth $2.5 billion, while Aluminium exports were close to $800 million. These sectors contribute to nearly 85% of total Indian exports which remain at risk under Section 232.

Other segments mentioned in Section 232 are relatively smaller in terms of exports to the US.