UPDATE 1-Trump signs off on deferring tariffs for most-favored nations for three months

(Adds background, industry letter)

WASHINGTON, March 31 (Reuters) - President Donald Trump has signed off on a plan to defer U.S. tariffs on goods from countries with most-favored nation status for three months, to help ease the economic fallout of the coronavirus, a source familiar with the decision said Tuesday.

The plan would not apply to tariffs on Chinese and European goods subject to Section 301 tariffs or to steel and aluminum subject to Section 232 tariffs.

The source said it remained unclear when Trump would sign an executive order deferring the levies. Once signed, it would give the U.S. Treasury Department the authority to direct Customs and Border Protection to delay collecting tariffs on those imports for 90 days.

Some 400 chief executives of small, medium, and large companies from across the country urged Trump in a letter on Tuesday to delay the collection of duties for a period of 90 to 180 days to give companies access to cash that would normally be paid to the the U.S. government, given virus-related shutdowns.

“Delaying duties helps us preserve cash flow - critically important during a prolonged period of little to no revenue,” the CEOs wrote in a letter dated Tuesday. “At the same time, delaying duties does not undermine the effect of tariffs on trade flows because the money is still due.”

Trade ministers from the United States and other Group of 20 (G20) major economies agreed on Monday to keep their markets open and ensure the continued flow of vital medical supplies, equipment and other essential goods as the world battles the pandemic.

The deferral would apply to duties imposed on items from countries with most-favored nation status, such as footwear and apparel, giving U.S. importers of such items a temporary reprieve.

White House trade adviser Peter Navarro last week denied a report that the administration was considering a broader tariff relief measure that would have included goods from China.

The modified plan affects a smaller subset of imports. (Reporting by Steve Holland and Andrea Shalal; Writing by Lisa Lambert; Editing by Leslie Adler and Jonathan Oatis)