April 30, 2018 / 12:30 PM / a month ago

CORRECTED-UPDATE 6-Trump postpones decision on metals tariffs for Canada, EU, Mexico

(Corrects spelling of Todd Leebow’s last name, 12th paragraph)

By David Lawder

WASHINGTON, April 30 (Reuters) - U.S. 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.

The decisions came just hours before temporary exemptions from the tariffs on these countries were set to expire at 12:01 a.m. (0401 GMT) on Tuesday.

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 percent tariff on steel imports and a 10 percent 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.

Trump has invoked a 1962 trade law to erect protections for U.S. 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 U.S. trading partners worldwide and have prompted several challenges before the World Trade Organization, are aimed at allowing the two U.S. metals industries to increase their capacity utilization rates above 80 percent 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 U.S. producers.

The terms agreed by Brazil, Argentina and Australia to escape the U.S. 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 percent from 2017 levels. Seoul is still subject to U.S. aluminum tariffs.

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.”

Todd Leebow, president of Majestic Steel USA, a Cleveland-based distributor of domestic steel products, said American steelmakers needed certainty that import protections won’t be eroded.

“We’re hopeful this extension moves us toward the most productive path for our domestic steel industry — the tariffs President Trump announced earlier this year and a quota system to limit the amount of imports flooding our country,” Leebow said in a statement.

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

A British government spokeswoman in Washington said the extension for the EU was “positive,” but the UK steel and aluminum industries needed safeguarding.

“We remain concerned about the impact of these tariffs on global trade and will continue to work with the EU on a multilateral solution to the global problem of overcapacity, as well as to manage the impact on domestic markets.”

Negotiations over U.S. 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.

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.

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 ($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.

Reporting by David Lawder; Additional reporting by Makini Brice, Eric Beech, Susan Heavey and James Oliphant in Washington, Phil Blenkinsop in Brussels and David Ljunggren in Ottawa; Editing by Peter Cooney, Lisa Shumaker & Shri Navaratnam

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