Trump postpones decision on metals tariffs for EU, Canada and Mexico


A worker stands in a steel workshop in Zouping, in China's eastern Shandong province, on March 10, 2018.
A worker stands in a steel workshop in Zouping, in China's eastern Shandong province, on March 10, 2018.PHOTO: AFP

WASHNGTON (REUTERS) -US President Donald Trump has postponed the imposition of steel and aluminum tariffs on Canada, the European Union and Mexico until June 1, and has reached agreements for permanent exemptions for Argentina, Australia and Brazil, the White House said on Monday (April 30).

The decisions came just hours before temporary exemptions from the tariffs on these countries were set to expire at 12.01 am (0401 GMT) on Tuesday (May 1).

In a statement, the White House said that the details of the deals with Brazil, Argentina and Australia would be finalized shortly, and it did not disclose terms.

“The administration is also extending negotiations with Canada, Mexico, and the European Union for a final 30 days. In all of these negotiations, the administration is focused on quotas that will restrain imports, prevent transshipment, and protect the national security,” the White House added

A source familiar with the decision said that there would be no further extensions beyond June 1 to stave off tariffs.

Trump on March 23 imposed a 25-per-cent tariff on steel imports and a 10 per-cent tariff on aluminum in March, but granted temporary exemptions to Canada, Mexico, Brazil, the EU, Australia and Argentina.

He also has granted a permanent exemption on steel tariffs to South Korea. Seoul is still subject to US aluminium tariffs.

Trump is working with South Korean President Moon Jae In ahead of the US leader's expected summit with North Korea's Kim Jong Un in the coming weeks.

Last month, the government in Seoul said it had made concessions to secure a revised trade deal with Washington and escape its steel duties. Trump has hinted that he might hold up the trade agreement with South Korea in an effort to gain more leverage in talks with North Korea.

Extensions for Canada and Mexico had been expected, as Washington, Mexico City and Ottawa work on revamping the North American Free Trade Agreement.

Trump has invoked a 1962 trade law to erect protections for US steel and aluminum producers on national security grounds, amid a worldwide glut of both metals that is largely blamed on excess production in China.

The tariffs, which have increased frictions with US trading partners worldwide and have prompted several challenges before the World Trade Organisation, are aimed at allowing the two US metals industries to increase their capacity utilization rates above 80 per cent for the first time in years.

Trump administration officials have said that in lieu of tariffs, steel- and aluminum-exporting countries would have to agree to quotas designed to achieve similar protections for US producers.

The terms agreed by Brazil, Argentina and Australia to escape the US tariffs were unclear. South Korea earned its permanent exemption from steel tariffs by agreeing to quotas that will cut its steel shipments by about 30 per cent from 2017 levels.

 
 

The White House said the agreements reflect administration efforts “to reach fair outcomes with allies to protect our national security and address global challenges to the steel and aluminum industries”,

But Canada, Mexico and the European Union have all insisted that they will not accept quotas to gain permanent exemptions from the US tariffs.

Canada is the largest steel exporter to the United States, and its industry is highly integrated with that of its southern neighbor, with raw materials and finished steel crisscrossing the Great Lakes region.

Negotiations over US steel and aluminum tariff exemptions for Canada and Mexico have also become intertwined with intensified talks to reach an agreement to update the North American Free Trade Agreement.

Canadian Prime Minister Justin Trudeau said on Monday that any move by the United States to impose tariffs on Canadian steel and aluminum would be a “very bad idea” guaranteed to disrupt trade between the two countries.

If the EU is subject to tariffs on the 6.4 billion euros (US$7.7 billion) of the metals it exports annually to the United States, it has said it will set its own duties on 2.8 billion euros of U.S. exports of products ranging from makeup to motorcycles.

“The only thing that I can tell you today is that we are patient but we are also prepared,” European Commission spokesman Margaritis Schinas told a news conference earlier on Monday.