U.S. in Talks on Tariff Exemptions, Trade Official Says

Less than two days before the Trump administration plans to impose steep tariffs on imported steel and aluminum, its chief trade representative said Wednesday that several of the nation’s top trading partners were in line for potential exemptions.

The trade official, Robert Lighthizer, said at a hearing of the House Ways and Means Committee that the administration was talking with Australia, Argentina and the European Union about excluding them from the 25 percent tariff on imported steel and 10 percent charge on aluminum.

He added that there were plans to talk with Brazil about possible exemptions, and raised the possibility that South Korea could be excluded as the United States continues to hold talks with Seoul over a bilateral trade agreement.

Lighthizer said he favored sparing those countries from the tariffs while talks continue, though he said that decision would be “up to the president.” Lighthizer said he expected the conversations over exclusions to conclude by the end of April.

The administration has already temporarily shielded Canada and Mexico from the tariffs during the renegotiation of the North American Free Trade Agreement.

Lighthizer’s testimony came a day after Treasury Secretary Steven Mnuchin was warned by global economic leaders at a meeting in Buenos Aires that the United States was risking a trade war by initiating the tariffs. Trump declared earlier in the month that “trade wars are good, and easy to win.”

But Lighthizer struck a different note Wednesday. “Nobody wins from a trade war,” he said. “We certainly don’t want a trade war. On the other hand, you have to ask yourself, can we go on with an $800 (and growing) billion trade deficit?”

If Trump decides to exclude Brazil and South Korea from the tariffs, and allows Canada and Mexico to remain exempt, he will have given a reprieve to the four largest foreign suppliers of steel to the United States, together accounting for half of all steel imports. That could make the tariffs less helpful to domestic steel mills.

“It raises the question of, if you exempt all of them, who’s left?” said William Reinsch, a trade expert at the Center for Strategic and International Studies. “It will reduce the value of the relief to the domestic industry.”

Foreign governments have continued to engage in high-level talks with the administration to make the case for exclusion from the tariffs. Cecilia Malmstrom, the European Union’s commissioner for trade, said in a statement she had met with the U.S. Commerce Secretary Wilbur Ross this week to talk about steel and aluminum trade “with a view to identifying mutually acceptable outcomes as rapidly as possible.”

Trump spoke this week with President Emmanuel Macron of France about how Europe and the United States “might come together over tariffs,” a White House official said in a statement.

Administration officials have said the tariffs are intended to counter an influx of cheap metals from China that are entering the United States through other countries. The Commerce Department has cited national security as the premise for the tariffs, saying the imports are crippling domestic producers and, by extension, the nation’s industrial base.

Asked about reports that the administration was preparing new set of tariffs aimed at China, Lighthizer said Trump would make a decision “in the very near future.” Lighthizer has been investigating China’s trade practices since August, including allegations of theft of intellectual property.

Lighthizer indicated that the administration was specifically concerned about Chinese policies that compel U.S. companies to share technology when they make investments in China.

“There are certain technology products that are under assault,” he said. “You have to give consideration to whether or not you would put tariffs on those products.”

But he noted that any tariffs would take into account the economic impact of raising the cost of consumer goods. “You would create an algorithm that would maximize the pressure on China and minimize the pressure on U.S. consumers,” he said.