Trump may exclude a country from trade tariffs, but with these five riders

The Trump administration is pressing countries to ally with the US in pushing back against Chinese trade policies in exchange for relief from American tariffs on steel and aluminium, according to a European official.

US Trade Representative Robert Lighthizer has been leading negotiations under which countries may be excluded from the tariffs of 25 per cent on imported steel and 10 per cent on aluminium. American trading partners and US companies are pressing for exemptions and exclusions from the tariffs, which take effect on Friday.

In talks with the US, Lighthizer has laid out five conditions that countries must address before being excluded, said the official, who spoke on condition of anonymity. The information was also contained in an internal European Commission document seen by Bloomberg. A second non-US official confirmed the broad outlines of the five conditions.

The qualifications are:

• Limiting steel and aluminium exports to the US to 2017 levels
• Actively addressing China’s various trade-distorting policies
• Being more assertive and cooperative with the US at the G-20 Global Steel Forum
• Cooperating with the US in launching cases against Chinese practices at the WTO
• Enhancing security cooperation with the US

The US Trade Representative’s office didn’t immediately reply to a request for comment.

Exclusion Opportunity

Trump signed a proclamation ordering the tariffs on March 8, invoking a seldom-used legal clause that gives him the authority to impose trade penalties to protect national security. But he has also sought to leverage the tariffs to achieve other goals. He has threatened to withdraw exclusions for Canada and Mexico if the two nations don’t agree to a new North American Free Trade Agreement that meets US satisfaction.

Meanwhile, Trump has invited any country with which the US has a “security relationship” to apply for an exclusion, setting off a global lobbying effort to secure relief from the tariffs. Australian Prime Minister Malcolm Turnbull has said his country has secured an exclusion, while countries from South Korea to Argentina are asking for similar treatment.

EU Pushback

The EU has aggressively pushed back against the US tariffs, threatening retaliation against iconic goods including motorcycles, jeans and bourbon.

The effort to recruit allies to protest Beijing’s trade policies comes as the Trump administration weighs broad tariffs against products made in China to punish the Chinese government for what the US sees as abuse of American intellectual property. The US is also considering restrictions on Chinese investments as part of the investigation, according to people familiar with the matter.

The Trump administration has frequently criticized China’s economic policies, accusing the Asian nation of failing to deliver on reforms it promised when it joined the World Trade Organization in 2001. After Trump announced the tariffs, China’s foreign Minister, Wang Yi, vowed a “justified and necessary response” to any efforts to incite a trade war.

Treasury Secretary Steven Mnuchin addressed Chinese officials during the Group of 20 meetings in Buenos Aires this week by reiterating the administration’s stance that trade must be free, fair and reciprocal, according to a person familiar with the matter who declined to be named because the talks were private. Mnuchin argued for China to adopt a market-oriented trade regime so economic forces work more efficiently, the person said.