Allies jostle for exemption from Trump's new tariffs

A steel fabrication shop in Ontario, Canada. Mexico and Canada were exempted from US President Donald Trump's steel and aluminium tariffs, pending discussions with these countries to revamp the North American Free Trade Agreement.
A steel fabrication shop in Ontario, Canada. Mexico and Canada were exempted from US President Donald Trump's steel and aluminium tariffs, pending discussions with these countries to revamp the North American Free Trade Agreement.PHOTO: NYTIMES

Persuasion, threats, personal appeals and diplomatic leverage used in bids for waiver

FRANKFURT • South Korea made an impassioned appeal to the US secretary of defence and national security adviser, reminding them of its role in trying to defang North Korea, while Europe pointed out that it was a longstanding military ally of the United States.

But it was Australia that deployed a secret weapon a day after US President Donald Trump imposed tariffs on steel and aluminium imports, as nations jockeyed for exemptions from the levies.

"We're calling in all contacts at every level," Ms Julie Bishop, Australia's Foreign Minister, told the Australian Broadcasting Corp.

Top among those enlisted: golfing legend Greg Norman, a friend of Mr Trump's. Norman and a handful of prominent Australian business leaders signed a letter beseeching Mr Trump not to take "any action that might have demonstrable negative impact on the mutually beneficial American-Australian bilateral relationship".

Last Friday, Mr Trump said on Twitter that he had spoken to the country's Prime Minister, Mr Malcolm Turnbull. "Working very quickly on a security agreement so we don't have to impose steel or aluminium tariffs on our ally, the great nation of Australia," he said.

In seeking to win a respite from the tariffs, US allies tried a mix of persuasion and threats, personal appeals and diplomatic leverage.

But they faced a delicate balancing act. A country that offers something in return for an exemption could set a precedent, allowing the White House to make further demands in the future in return for access to the US market, and fracture any sense of unity between capitals from Brussels to Seoul that have roundly criticised the tariffs.

  • Who's in the queue for waiver?

  • WASHINGTON • US President Donald Trump, who has imposed tariffs of 25 per cent on steel imports and 10 per cent on aluminium, at the outset granted exemptions to Canada and Mexico before extending a waiver to Australia.

    Soon after Mr Trump opened the door, Brazil, Japan, South Korea, Argentina and Europe clamoured for similar special treatment, while Chinese producers called on Beijing to retaliate in kind.

    Tokyo and Brussels rejected any suggestion that their exports to the United States threatened the country's national security, while China's metal industry issued the country's most explicit threat yet in the row, urging the government to retaliate by targeting US coal.

    Brazil, which after Canada is the biggest steel supplier to the US market, said it wanted to join the exemption list, and Argentina made a similar case. Japan, the top US ally in Asia, was next in line.

    While carrying a message to Washington to push forward a diplomatic breakthrough over North Korea, South Korea's national security office chief Chung Eui Yong also asked US officials to support Seoul's request for a waiver, a presidential spokesman said.

    REUTERS

Questions over how to pressure Mr Trump were similarly perilous. Nations trying to protect their own producers risked creating an every-nation-for-itself atmosphere, undermining the World Trade Organisation (WTO) system for resolving global trade disputes.

But taking legal action could not only launch a protracted process, but also trigger US ire.

European Union countries were compiling a list of US products that could be subject to reciprocal levies. The region is likely to face a tough decision, however, about whether to wait for WTO approval, or simply to impose the tariffs.

Still, there were signs that attempts by some countries to win tariff immunity from the US were sowing tension among European allies.

Mr Liam Fox, Britain's International Trade Secretary, told the BBC on Friday he would "be looking to see how we can maximise the UK's case for exemption" when he visits Washington this week.

The suggestion that Britain might go its own way provoked a rebuke from Mr Jyrki Katainen, EU vice-president for jobs and competitiveness. "We cannot accept that the EU is divided to different categories," he said on Friday.

South Korean envoys appealed for their own exemption when they visited the White House last week to brief Mr Trump on their meeting with North Korean leader Kim Jong Un. Whether the appeals will work is an open question: The Trump administration has claimed the country is a conduit for Chinese steel evading anti-dumping rules - a practice known as trans-shipping.

South Korean officials have argued that only 2.4 per cent of steel exported to the US in 2016 used Chinese material. Seoul is badly in need of a free pass for its steel industry. The country accounts for almost 10 per cent of US steel imports and stands to suffer the most.

US allies were particularly floored by Mr Trump's justification for the tariffs. He invoked a provision of WTO rules that allows countries to impose trade restrictions in the interest of national security.

The national security argument seemed weak when applied to South Korea or European countries that have formal military alliances with the US. The tariffs "have nothing to do with the security of the United States", Mr Georg Streiter, a spokesman for German Chancellor Angela Merkel, said at a news briefing on Friday. "It's purely business."

NYTIMES

A version of this article appeared in the print edition of The Sunday Times on March 11, 2018, with the headline 'Allies jostle for exemption from Trump's new tariffs'. Print Edition | Subscribe