All fairly traded steel, aluminum should be tariff-free - top U.S. lawmaker

By Lesley Wroughton and David Ljunggren

MEXICO CITY (Reuters) - The top U.S. Republican lawmaker overseeing trade policy said on Sunday all fairly traded steel and aluminum should be excluded from President Donald Trump's tariffs, especially those of NAFTA partners Canada and Mexico.

Kevin Brady, chairman of the House Ways and Means Committee, made his remarks shortly after U.S. Commerce Secretary Wilbur Ross said he could not rule out the prospect of no exemptions.

Mexico and Canada have both threatened retaliation if Trump goes ahead with imposing the metal tariffs later this week.

Asked whether the two NAFTA allies should be exempted, Brady told reporters: "Yes, and going further, excluding all fairly traded steel and aluminum, not just from these two countries."

The tariffs, which Trump says are needed to protect domestic industries against unfair competition from China and other nations, have sparked fears of a wider global trade war. The European Union's trade chief on Friday warned of possible retaliation.

"I think we can make a very strong case for other countries as well," said Brady, who did not give details.

Brady made his comments in Mexico City, where officials from Mexico, the United States and Canada are holding the seventh round of talks to modernize the North American Free Trade Agreement. Canada's chief negotiator says the tariffs threat has made the slow-moving negotiations more complex.

The current round will end on Monday with meetings between Canadian Foreign Minister Chrystia Freeland, U.S. Trade Representative Robert Lighthizer and Mexico's Economy Minister Ildefonso Guajardo to determine the next steps.

Brady, who is due to meet Freeland later on Sunday, said he expected the tariffs issue to be "front and center when the ministers arrive."

Canada, the single largest supplier of both steel and aluminum to the United States, says any tariffs would be totally unacceptable.

Ross told U.S. television news shows on Sunday that Trump had spoken to world leaders about his planned tariff hikes and was not considering any exemptions to the measure.

Brady said he and others would "continue to make the case to the White House about a smart approach that really narrowly targets unfairly traded products."

Brady is leading a bipartisan delegation to Mexico City and said he was encouraged by the progress made in the latest round of NAFTA talks.

(Reporting by Lesley Wroughton and David Ljunggren; Editing by Phil Berlowitz)