India-U.S. Talks Face Section 232 Tariffs, Casting Doubt on a Deal

President Trump’s move to widen U.S. tariffs into sectors once seen as off-limits has sharpened doubts in New Delhi about the real payoff of ongoing trade talks with India. By expanding duties under Section 232 of U.S. trade law—using national security as the legal hook—the administration has opened probes into areas such as pharmaceuticals, heavy machinery, semiconductors, and wind equipment, complicating attempts to reach a clean deal that removes reciprocal tariffs. Indian officials say any agreement that fails to curb new, security-based barriers could leave exporters with little relief and plenty of risk.

Why the expansion of Section 232 matters

The widening net matters because Section 232 actions are more difficult to challenge in court than other trade tools, according to Simon Evenett of IMD Business School. That legal shield gives Washington greater room to impose tariffs while facing less judicial pushback.

• The United States is running multiple Section 232 investigations at once, signaling a shift toward “slice-by-slice” protection across many sectors rather than one sweeping tariff package.
• For Indian manufacturers already hit by metal duties, this approach raises the possibility of new costs appearing without much warning.

Indian steel and aluminum exporters have dealt with national security tariffs for years, and fresh measures threaten to deepen the pain. The expansion of duties on steel and aluminum derivatives has already pushed up costs for U.S.-bound shipments and, by extension, for American buyers in sectors like energy and construction.

New Delhi has also taken note of the U.S. announcement of a 100% tariff on imported branded and patented pharmaceuticals starting October 2025, a move that could pinch Indian pharma exports even if generic drugs are formally spared.

Indian officials argue that these steps erode the value of any trade deal, especially one centered on rolling back reciprocal tariffs now overshadowed by security-driven barriers.

Status of negotiations and key sticking points

Talks have continued nonetheless. India’s Commerce Ministry says the United States has not engaged in a meaningful way on steel and aluminum tariffs, calling it a central sticking point.

• Meetings in September 2025 involving Commerce Minister Piyush Goyal and U.S. counterparts produced warm language but no breakthrough on metals, where New Delhi wants measurable relief.
• On the U.S. side, Commerce Secretary Howard Lutnick has urged India to open markets further and address actions Washington views as harmful to U.S. interests, telling Indian negotiators that India must “play ball” to resolve the issues.

That message, coupled with a widening scope of Section 232 probes, has cooled hopes for a quick trade reset.

The core strategic dilemma for New Delhi

The strategic question for New Delhi is whether a trade deal has much bite if Section 232 remains a live wire across sensitive sectors. India’s goal—scrapping reciprocal tariffs to boost two-way trade—clashes with Washington’s layered use of national security to justify sector-specific duties.

• Even if negotiators agree on a tariff schedule today, a new investigation tomorrow could push key exports into the penalty box.
• The United States has opened more than a dozen concurrent Section 232 investigations, covering technologies and industrial systems central to India’s growth plans.

According to analysis by VisaVerge.com, this approach puts India in a defensive crouch: it needs both immediate relief and a durable curb on security-based measures, or the gains from any deal may be short-lived.

Real-time effects on Indian exporters

Indian exporters see the effects already:

• Metal shipments face higher costs and unpredictable price dynamics downstream.
• Manufacturers of turbines and electrical equipment worry that parts they supply could be drawn into investigations if linked to steel or advanced components.
• Pharmaceutical exporters, long a bright spot, face uncertainty around the October 2025 pharma tariff timeline and potential knock-on checks.
• Even sectors that escape tariffs directly may feel pressure if U.S. buyers pass along the cost of inputs, creating ripple effects that complicate contracts, investment decisions, and hiring.

Example scenarios:
– A midsize metals supplier selling components to a U.S. wind project might suddenly face a duty if the component falls under a new Section 232 review tied to steel or advanced machinery. With production slots booked and shipping underway, costs can spike mid-contract.
– Pharmaceutical exporters of branded products will need to track the October 2025 deadline and decide whether to shift volumes, replace product lines, or invest in regulatory approvals where margin pressure grows.

Legal and diplomatic options New Delhi is weighing

Indian officials are considering avenues within the global rulebook and beyond:

• Pursue WTO action if U.S. actions violate global norms, while reserving the right to respond with “substantially equivalent” measures.
  • WTO processes move slowly, but a legal challenge can set markers for future conduct and create diplomatic pressure.
• Work with U.S. allies who are wary of an overbroad national security claim to build a coalition for narrower application of the law.

Limitations and risks:
– Washington’s reliance on Section 232 has been designed to resist court challenges domestically.
– WTO panels have limited reach when countries invoke national security justifications.

What India wants in deal text

Policy advisers in New Delhi say the text of any deal must be sharpened. India will likely push for clauses that either:

• Exclude sectoral tariffs justified on security grounds, or
• Set up clear, fast dispute channels if such tariffs appear.

Without such guardrails, officials fear a headline agreement could mask weak, temporary relief. This is both a legal and a trust question for exporters who need predictability to sign long-term contracts. If the ground can shift with each new investigation, companies may hold back on investment or diversify away from the U.S. market.

Practical steps Indian players are considering

Officials are reviewing practical moves companies and ministries can take to limit damage:

1. Push for clear deal language
   • India will press for provisions that explicitly exclude new sectoral tariffs tied to national security or at minimum establish quick, binding review mechanisms.
2. Monitor Section 232 investigations closely
   • Agencies and industry groups should track each probe, model exposure, and prepare targeted countermeasures if duties land on Indian exports.
3. Diversify export baskets
   • Firms can expand into services, agri-technology, clean energy goods, and higher-value medicines to reduce risk.
4. Strengthen trade diplomacy
   • Use WTO forums and coordinate with partners sharing concerns about broad security claims.
5. Bolster domestic competitiveness
   • Invest in value addition, quality standards, and supply chain integration to help Indian goods hold market share even when tariffs bite.

These steps are practical, not just theoretical. Clear clauses on cost-sharing and contingency planning can soften shocks, but many suppliers lack the leverage to renegotiate mid-contract.

U.S. rationale and the larger debate

The U.S. position is rooted in a broader industrial policy debate:

• Supporters argue targeted tariffs are justified to protect critical supply chains and guard against vulnerabilities in advanced industries.
• Critics say a wide reading of national security can become a blanket protectionist tool, with unclear criteria and uneven effects.

The absence of a single, settled standard for what qualifies as a security risk leaves room for fast-moving probes and sudden policy swings—precisely the problem New Delhi highlights when negotiating trade deals.

What a meaningful deal would need

For New Delhi, the headline risk is that a formal deal may carry less practical value than the press release suggests if it does not constrain security-based tariffs.

• The Indian Commerce Ministry has warned that the U.S. refusal to address steel and aluminum remains a hard barrier to progress.
• Politics are sensitive on both sides: rolling back security measures in Washington is difficult once framed as essential, and in India signing a deal without relief on metals would be hard to defend to industry and labor groups.

Still, both sides have incentives to keep negotiating. Trade has grown, and there is demand for more predictable rules. Indian tech and services firms continue to see the U.S. market as essential, and American companies are investing in India’s digital and manufacturing push.

A well-crafted deal could:
– Set up better dispute channels,
– Create carve-outs that preserve cooperation amid Section 232 frictions,
– But only if the text addresses the interplay between traditional tariff schedules and national security actions.

Tactical next steps for India (legal, diplomatic, domestic)

India’s next steps may blend legal, diplomatic, and domestic-policy tracks:

• Faster customs processing for alternative markets
• Incentives for higher-value production
• Targeted export credit to help firms adapt
• Industry early-warning systems to flag U.S. investigations that touch supply chains
• Negotiator efforts to tie future tariff changes to transparent benchmarks and consultation timelines

These moves won’t erase the risk from Section 232, but they can reduce shocks and keep doors open while talks continue.

The broader significance

This story is not just about India-U.S. bargaining. It signals that global trade rules are in flux, with national security framing more decisions.

• The expansion of Section 232 into sectors like patented drugs, heavy trucks, and advanced equipment shows how quickly the perimeter can move.
• For Indian exporters and workers, the question is how to plan for a world where tariffs can appear sector by sector, file by file.
• For negotiators, the task is to write deals that matter on the shop floor, not just on paper.

For readers tracking the legal framework, the U.S. Department of Commerce Section 232 page provides official information on ongoing and past investigations: https://www.commerce.gov/issues/section-232.

As VisaVerge.com reports, India’s trade team will likely keep pressing for explicit guardrails in any agreement, while preparing backup measures if new duties land. That twin-track approach—pursue a deal, prepare for turbulence—may be the most realistic path in a period when national security claims occupy center stage in tariff policy.