Trump's tariffs on steel, aluminium imports may exclude Canada, Mexico

The White House raised the possibility on Wednesday that impending hefty US tariffs on steel and aluminium imports could exclude a clutch of countries besides Canada and Mexico as President Donald Trump looked set to authorise the measures as early as Thursday.

Trump was expected to sign a presidential proclamation to establish the tariffs during a ceremony on Thursday, but a White House official said later it could slide into Friday because documents had to be cleared through a legal process.

A senior US official said the measures would take effect about two weeks after Trump signs the proclamation.

The tariffs would impose duties of 25 per cent on steel and 10 per cent on aluminium to counter cheap imports, especially from China, that the president says undermine US industry and jobs.

It was not immediately clear whether the proclamation would list countries to be exempted, as pressure grew for Trump to exclude US allies from the action.

“We expect that the president will sign something by the end of the week and there are potential carve-outs for Mexico and Canada based on national security, and possibly other countries as well based on that process,” White House spokeswoman Sarah Sanders told a regular media briefing. “It will be country by country, and it will be based on national security.”

Action that does not include exemptions risks retaliatory tariffs on US exports - not least by Canada and Europe - and complicates already tough trade talks on the North American Free Trade Agreement.

Trump said on Monday that Canada and Mexico would only be excluded after the successful renegotiation of NAFTA.

The benchmark Standard & Poor’s 500 stock index ended slightly lower following a volatile session after Trump promised the tariffs but then said Mexico and Canada could be exempt.

The S&P .SPX closed 0.05 per cent lower after being down 0.4 per cent, while the Dow Jones Industrial Average.DJI ended down 0.33 per cent. The US dollar .DXY pared gains to end little changed, while the Canadian dollar CAD= and Mexican peso MXN= pared some losses.

Markets were rattled by Tuesday’s resignation announcement by Trump’s chief economic adviser, Gary Cohn, who was seen as a bulwark against Trump’s economic nationalism.

Cohn’s departure, after an internal White House battle over Trump’s plans to impose the tariffs, clears the way for greater influence by trade hardliners such as Commerce Secretary Wilbur Ross and Peter Navarro, Trump’s trade policy adviser.

Sanders said Trump was considering several candidates to fill Cohn’s position, while Navarro said he was not short-listed for the job.

In his first tweet on Wednesday, the Republican president showed no sign of backing away from the tariffs, saying the United States had lost more than 55,000 factories and 6 million manufacturing jobs and let its trade deficit soar since the 1989-1993 administration of President George H.W. Bush.

Later, his tweets turned to trade with China, demanding that Beijing lay out plans for reducing its trade surplus with the United States by $1 billion, which appeared to have been raised during a meeting with a top Chinese official last week.

“China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States,” Trump tweeted, without saying where the message had been conveyed.

China ran a record goods trade surplus with the United States last year of $375.2 billion

TARIFF WARNINGS

Opposition to the blanket tariffs mounted among lawmakers and the business community. More than 100 House of Representative Republicans, including Kevin Brady, chairman of the House Ways and Means Committee that oversees US trade policy, wrote to Trump praising him for standing up to “bad actors,” but emphasized that fairly traded products should be excluded from the tariffs.

In a separate letter, Iowa’s congressional delegation, including two Republican senators, warned that the tariffs would hurt the state’s farmers and manufacturers.

The head of the influential US Chamber of Commerce, Tom Donohue, warned about the impact to the economy.

“We won’t drive the economy to over 3 per cent growth or continue to create jobs if we go down this path,” said Donohue, the chamber’s president and chief executive. “We urge the administration to take this risk seriously.”

A report from the Federal Reserve on Wednesday noted that four of the US central bank’s 12 districts saw a “marked increase” in steel prices partly because of a decline in foreign competition.

With an expected increase in US steel demand, United States Steel Corp said it would restart one of two blast furnaces and steel-making facilities and rehire 500 employees at its Granite City, Illinois, plant. Shares of Nucor (NUE.N), U.S. Steel (X.N) and AK Steel (AKS.N) lifted the S&P 1500 steel index .SPCOMSTEEL.