White House Delays Tariffs on EU, Canada and Mexico for 30 Days

Posted April 30, 2018 9:15 p.m. EDT
Updated April 30, 2018 9:18 p.m. EDT

WASHINGTON — The Trump administration has delayed a decision about whether to impose steel and aluminum tariffs on the European Union, Canada and Mexico for another 30 days, giving key allies a reprieve as the countries carry out further negotiations, a person familiar with the discussions said Monday evening.

The 25 percent tariffs on steel and 10 percent on aluminum were set to go into effect May 1. The administration, which granted temporary exemptions to a handful of countries in March, has also reached initial agreements with Argentina, Australia and Brazil that will allow them to avoid, at least for now, the tariffs. Details of those agreements will be finalized in the next 30 days, the person said.

President Donald Trump’s decision temporarily puts off a controversial announcement that could have imposed stiff tariffs on close U.S. allies and prompted swift retaliation on American products in return.

The Trump administration had been seeking concessions from these countries in exchange for not allowing the tariffs to go into effect, betting that the threat of tariffs would pressure allies and trading partners to renegotiate trading terms in America’s favor. But while the threat of tariffs had helped finalize a continuing deal with South Korea, there has been little indication that nations like the European Union would fold to White House demands.

The decision will come as a relief to major U.S. allies that were bracing for damage to their economy from lower sales of metals into the United States. But it could fuel criticism that Trump is more bark than bite and increase the pressure on the White House to squeeze concessions from other nations that they have so far been unwilling to agree to, such as lowering the amount of metals imported into America.

The extension will also give the Trump administration more breathing room to work on a separate trade battle with China, which has threatened tariffs on U.S. products in retaliation for both the metals tariffs and other levies the United States has threatened to place on Chinese goods. A delegation of top officials is headed to China this week to engage in discussions with the Chinese about the trade dispute.

Foreign allies and companies that source steel and aluminum from abroad were left in suspense about how the tariffs deadline would play out until late Monday. American negotiators had been working for weeks to secure concessions from the countries the president temporarily exempted from his order in exchange for permanent exclusions from tariffs. But foreign leaders were not sure of the outcome, and administration officials insisted the final decision would fall to the president.

In recent weeks, U.S. negotiators have pressed allies to restrain their own metal shipments to the United States voluntarily in exchange for having the tariffs lifted. But officials have also embarked on unrelated trade discussions. Commerce Secretary Wilbur Ross, who has been charged with negotiating with the European Union, had been pushing for the bloc to reduce its tariffs on imported cars and lower its trade surplus with the United States.

European officials have held firm to its insistence that the trade measures violate international trading law. The temporary extension is unlikely to satisfy the European Union, whose leaders have said they do not want to negotiate under threat and have demanded a permanent and unconditional exemption from the tariffs.

If the tariffs do go into effect after the 30-day reprieve, Europe has promised swift retaliation. It has drawn up a lengthy list of U.S. products it would penalize if the tariffs went into effect, including orange juice, cranberries, motorcycles and bluejeans. It has also asked to join a dispute China brought at the World Trade Organization against the U.S. steel and aluminum tariffs.

An extension of the tariff deadline was more widely expected for Canada and Mexico, which are still entrenched in negotiations with the United States over the future of the North American Free Trade Agreement. Though differences of opinion remain, officials from the countries insist they are making quick progress toward a goal of concluding their talks by the end of May.

Canada and Mexico have said that erecting a tariff in the middle of these discussions could upend delicate negotiations. On Monday, Prime Minister Justin Trudeau of Canada said he was “optimistic” that his country would secure an exemption, arguing that the Trump administration understood that tariffs on Canada would hurt jobs on both sides of the shared border.

A person familiar with the deliberations said the White House had reached agreements in principle with Argentina, Australia and Brazil, but further details were not immediately forthcoming.

The administration has also been in talks with Japan, the largest America ally to be left off the initial list of countries that were granted a temporary exemption from the U.S. steel and aluminum tariffs — in part because of the country’s trade patterns, including a large surplus with the United States, but also because the Trump administration hoped to urge the country into one-on-one trade talks.

But Prime Minister Shinzo Abe dashed those plans after visiting the president at Mar-a-Lago in mid-April. He insisted that talks take the form of the United States re-joining the Trans-Pacific Partnership, a multicountry trade deal Trump withdrew from. Trump, meanwhile, derided the TPP, writing on Twitter that he didn’t like the deal for the United States and that it had “too many contingencies.”

The monthlong reprieve prolongs the state of uncertainty hanging over the global economy, making it difficult for businesses to plan and discouraging them from investing in new factories or hiring more workers.

That unpredictability has plagued even steel and aluminum companies which support the measure. Todd Leebow, president and CEO of Majestic Steel USA, which buys and sells U.S.-made steel, said the tariffs were already helping revive the U.S. industry, but his customers did not know where they would be able to purchase metals from, and where prices might trend.

“From an industry perspective, the challenge that we have is it creates uncertainty,” Leebow said.