(Bloomberg) -- The U.S. will shield a list of allies including Europe, Australia, South Korea, Argentina and Brazil from steel and aluminum tariffs that take effect on Friday, according to U.S. Trade Representative Robert Lighthizer.
President Donald Trump has decided to “pause the imposition of the tariffs with respect to those countries,” Lighthizer told the Senate Finance Committee on Thursday. “We have the two Nafta countries. We have Europe, Australia, we have Argentina, we have Brazil, and obviously Korea.”
The exemptions would amount to at least half of U.S. imports in 2017. It was unclear from Lighthizer’s remarks to the committee whether those nations wouldn’t have to pay the tariffs while negotiating a solution or if they’re getting more permanent relief. Lighthizer said on Wednesday that the U.S. wanted to wrap up the discussion over which countries will get firm exemptions by the end of April.
Trump announced earlier this month he was imposing a 25 percent tariff on imported steel and 10 percent on aluminum but exempted Canada and Mexico as long as they agreed to an updated North American Free Trade Agreement. The president also left the door open for allies to negotiate their own exemptions, sparking a furious lobbying effort by trading partners like the European Union, which is threatening retaliation if it’s hit by the duties.
The EU believes it’s on track to be exempted following two days of talks between European Trade chief Cecilia Malmstrom and Trump administration officials in Washington, four EU officials said Thursday on the condition of anonymity.
“Cecilia Malmstrom had a good, very fruitful visit to Washington,” commission Vice President Jyrki Katainen said in a Bloomberg Television interview on Thursday. “We have good opportunities now to solve the issue and stabilize, or calm down, the problem.”
The EU has been seeking a waiver while warning that a failure to gain one would lead to a tit-for-tat response on 2.8 billion euros ($3.5 billion) of imports of U.S. goods including Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey.
Trump made the case for restricting steel and aluminum imports to protect national security. The administration says U.S. manufacturing has been decimated by the flood of imports into the U.S. at cut-rate prices because of Chinese overcapacity. The president had said a global tariff was needed to address China’s shipments of the metals that pass through another country en route to the U.S.
Companies are also seeking production exemptions in a separate process overseen by Commerce Secretary Wilbur Ross. The secretary told the House Ways and Means Committee on Thursday that his department is already processing up to 200 queries for exclusions and it’s trying to “minimize” the impact of the tariffs for downstream U.S. metal users.
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