India has notified the World Trade Organisation (WTO) of its plan to impose retaliatory tariffs on selected U.S. products in response to safeguard duties levied by Washington on Indian automobile parts and vehicles. The proposed measures, circulated by the WTO on Friday (July 4, 2025), are aimed at countering a 25% tariff hike by the United States, which India claims violates global trade norms.

According to India’s formal communication to the WTO’s Council for Trade in Goods, the retaliatory duties would match the estimated $723.75 million collected annually by the U.S. on imports of Indian automobile components and light vehicles affected by the safeguard measures.

U.S. Auto Tariffs Draw Flak

The U.S. had on March 26 adopted a safeguard measure in the form of a 25% ad valorem tariff on imports of passenger vehicles, light trucks, and certain auto parts from India. These measures came into effect on May 3, 2025, and are set to continue indefinitely. However, India has pointed out that Washington has not officially notified the WTO of these actions, even though they function as safeguard measures.

India argues that the tariffs breach the WTO’s General Agreement on Tariffs and Trade (GATT) 1994 and the Agreement on Safeguards. With no progress in consultations, India has exercised its right to suspend equivalent concessions under WTO norms.

$2.89 Billion in Indian Exports Affected

As per the WTO filing, the U.S. safeguard tariffs affect an estimated $2.89 billion worth of Indian exports annually. The Indian government is now seeking to recover an equivalent amount through reciprocal duties on selected American products.

“The proposed suspension of concessions or other obligations would take the form of an increase in tariffs on selected products originating in the United States,” the WTO notification stated.

Second Trade Clash in Recent Weeks

This is the second such action by India in recent weeks. Last month, New Delhi announced similar retaliatory plans in response to U.S. tariffs on Indian steel and aluminium. The moves come even as both countries are engaged in negotiations for an interim trade deal aimed at enhancing bilateral trade relations.

Trade experts say the tit-for-tat moves may complicate talks between the world’s two largest democracies. However, India has made it clear that any violation of WTO rules, particularly when consultations are denied, will be met with a firm response.