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How Trump's tariffs morphed from 'no exemptions' to carve-outs galore


By and David Ljunggren

WASHINGTON/OTTAWA (Reuters) - In the space of a week, U.S. Donald Trump's and aluminum tariffs went from a "no exemptions" plan to one filled with carve-outs for and Mexico, and likely for other other allies and hundreds of imported products not available domestically.

People familiar with the shift say Trump's mind was changed by a furious last-ditch lobbying campaign from the Canadian government, Republican lawmakers, business groups and the United Steelworkers - the very union whose members stand to benefit most from the tariffs.

Trump said on Friday he was ready to work out an exception for Australia, while Japan, South Korea, the and called for similar treatment.

The exemptions for and Mexico, which are temporary, were also seen as being prompted part by the North American Free Trade Agreement talks, where U.S. negotiations could use the prospect of making them permanent as a

"I have to think that the exclusion was probably also granted because we're going to be a little more accommodating to them at the (NAFTA) negotiating table," said Mark Warner, a Canadian

Asked whether had offered any concessions to secure an exemption, a Canadian said there was no evidence of this and that had not changed its NAFTA negotiating line.

A Mexican also denied that any concessions were offered to Forcing to pay the tariffs, however, would make it very difficult to complete NAFTA talks, the said.

"If you do that, kiss good-bye any possibility of ... well, basically anything," the added.

NAFTA's legal structure, which offers its members tariff-free access to each other's markets, was a major complication in applying the tariffs to and Mexico, according to a prominent trade lobbyist, who spoke on condition of anonymity due to the sensitivity of the matter. "I do think the possibility of NAFTA partners walking away from the table mattered quite a bit," the said.


Trump first drew the link between the metals tariffs and NAFTA on Monday in a message.

Less than 24 hours after declared that there would be no exceptions to the tariffs, Trump tweeted that they may come off for and "if a new and fair NAFTA agreement."

Adding new elements to the negotiations to create wiggle room on big decisions was a Trump tactic familiar to David Bozell, a supporter of the

"If he doesn't see that there's room to maneuver, he'll create some," said Bozell, of For America, a conservative grassroots political group.

In the days leading up to Thursday's announcement, the biggest trade move of Trump's presidency, key industry players and trading partners were still in the dark about the contours of the plan.

United Steelworkers had voiced opposition to tariffs on Canada, whose and aluminum industries are fully integrated with those of the and where workers are represented by the Pittsburgh-based union.

Yet members were already traveling to to appear with Trump at the signing ceremony before the union knew if it could fully support the plan.

"We didn't know exactly what the exclusion was until it got announced," Gerard, who is Canadian, told "We kept making the case that wasn't the enemy."


also had sprung into action to defend NAFTA and and aluminum trade once it became clear last week that Trump was serious about imposing tariffs.

called Trump on Monday to "forcefully defend" the interests of Canadian workers and to stress that the tariffs would not help talks to modernize the NAFTA trade pact, according to a who spoke on the condition of anonymity.

Trudeau also spoke on Thursday with U.S. Senate and Paul Ryan, prominent Republican critics of the tariffs, the prime minister's office said.

Canadian cabinet members also kept phone lines "humming" with their U.S. counterparts in an all-out push that recalled a lobbying effort in April 2017 to persuade from NAFTA but to pursue re-negotiations instead.

"We are reaching out to people in the and asking 'Are you aware that you run a trade surplus with Do you know quite how much U.S. buys?" said another person familiar with Canada's lobbying effort.

According to data, the exported $4.35 billion worth of and mill products to in 2017 against $3.69 billion worth of Canadian imports.

Republican congressional sources said Ryan and House had been pressing Trump all week to avoid and aluminum tariffs that would hurt U.S. allies, and were working to suggest ways to narrow the tariffs further.

But an administration insisted on Wednesday that Trump's final tariff proclamations had not been softened, saying the "flexible but firm" approach allows exemptions for allies, but must be offset by higher tariffs on remaining countries.

"We have structured these proclamations in a way which are unequivocally designed to defend our aluminum and industries," the said.

(Additional reporting by in Toronto, Roberta Rampton, Susan Cornwell, Richard Cowan and Ginger Gibson in Washington, and Ana Isabel Martinez and Noe Torres in City; Editing by Peter Szekely)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sat, March 10 2018. 06:20 IST