Finance

Countries scramble to win exemptions from steel tariffs

Major U.S. allies are scrambling to gain an exemption from President Trump's sweeping steel and aluminum tariffs that are set to take effect on Friday.

U.S. Trade Representative Robert Lighthizer said he is in talks with the European Union, South Korea, Argentina and Australia about how to win exclusions from 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports.

South Korea, Japan, the United Kingdom, Germany and Brazil are all among the trading partners that have asked for meetings or have talked to Lighthizer, Commerce Secretary Wilbur Ross or other Trump administration officials to request a break from the hefty duties.

Lighthizer told the House Ways and Means Committee that a select group of countries, which are still to be determined, won't face immediate tariffs during the course of negotiations on the exclusions.

The aim is to complete the exemptions process by the end of April.

"Whether that's going to happen or not is up to the president, but that's how I envision it," he told the panel, which includes a number of Republicans who are skeptical of the tariffs.

Putting a hold on tariffs while in talks with the countries would be easier than imposing and then removing duties over a short period of time, Lighthizer said.

While Lighthizer has been tapped to lead the effort on exemptions, he acknowledged that the president will have the ultimate say as to what countries eventually earn them.

After Trump announced the tariffs on March 8, he invited nations to come to Washington and persuade him to let them off the hook.

"I'll have a right to go up or down, depending on the country, and I'll have a right to drop out countries or add countries," he told his Cabinet that day. "We just want fairness. Because we have not been treated fairly by other countries."

Australian Prime Minister Malcolm Turnbull has said his country has secured an exemption from the tariffs, although the White House has yet to make an official announcement.

Canada and Mexico have won an exemption for now, but Lighthizer said that policy is "subject to certain conditions" along with the successful completion of an overhaul of the North American Free Trade Agreement.

The three countries recently completed the seventh round of talks and are continuing negotiations to update the 24-year-old pact.

South Korea is facing a similar circumstance because it is negotiating with the United States to amend its six-year-old free trade agreement.

South Korean Foreign Minister Kang Kyung-wha said on Sunday that her country has requested an exemption as a longtime ally and as a partner that is helping facilitate talks between Trump and North Korea's leader, Kim Jong Un.

"We've put all of our arguments and considerations on the table and we're hoping for a good result," Kang said on CBS's "Face the Nation."

She said that the threat of tariffs - South Korea is the third largest importer of steel - during those trade talks are "not helpful." 

But because South Korea is a major steel producer, Lighthizer suggested it could be more difficult for Seoul to obtain an exemption.

"Korea is a particular problem in the area of steel," Lighthizer told the congressional panel on Wednesday.

The massive lobbying effort to win exemptions brought Cecilia Malmström, the EU commissioner for trade, back to Washington this week to meet with Ross and Lighthizer.

"Good meeting here in snowy Washington DC with Secretary of Commerce Wilbur Ross," Malmström tweeted on Wednesday.

Malmström and Ross released a joint statement saying, "We have agreed to launch immediately a process of discussion with President Trump and the Trump administration on trade issues of common concern, including steel and aluminum, with a view to identifying mutually acceptable outcomes as rapidly as possible."

Before the meeting with Ross, Malmström said she would "insist that EU as a whole is excluded from tariff measures. We should work together to address overcapacity in steel and aluminum."

The EU has pushed back against the tariffs and threatened to retaliate against iconic U.S. goods including Harley-Davidson motorcycles, Levi's jeans and bourbon whiskey.

Even though some EU nations are meeting separately with Trump administration officials, the United Kingdom and the EU are working together on a "whole EU approach" for the 28-nation bloc, a spokesperson at the British Embassy told The Hill.

Based on the Trump administration's decisions, tariff exclusions could cover many of the top 10 exporters of steel into the United States.

Other top exporters including Taiwan, India, Turkey and Russia weren't mentioned during the hearing.

Lighthizer's comments to the Ways and Means Committee shed a little more light on what has so far been a murky process since the president signed the tariffs order.

The Office of the U.S. Trade Representative has yet to publicly provide a framework for what is needed for countries to win an exemption, a step that top trading partners argue would provide greater clarity on process.

Trading partners do not understand what the desired outcomes of the tariffs are and how the Trump administration squares diplomatic objectives and economic objectives, said one source who has knowledge of the exemption talks.

On Monday, the Commerce Department set up separate procedures to consider product exclusions for U.S. businesses that have trouble getting the steel and aluminum they need here.

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