Japan urges U.S. to shun steel tariffs but makes no threats

By Ami Miyazaki and Linda Sieg

TOKYO (Reuters) - Japan on Tuesday stuck to its a low-key approach to threatened U.S. tariffs on steel and aluminium, reflecting a desire to keep trade fights from hurting security ties as well as lessons learned about how to deal with President Donald Trump.

The spectre of a trade war coincides with signs of a thaw in a crisis over North Korea's nuclear and missile threat, prompting concerns in Tokyo that talks between Pyongyang and Washington could take place despite Japan's stance that the focus should be on putting increased pressure on Pyongyang.

Minister of Economy, Trade and Industry Hiroshige Seko on Tuesday repeated that Japanese steel and aluminium exports are not affecting America's national security but are helping America's economy. He declined comment on possible retaliation.

"High quality steel and aluminium exports from (U.S.) ally Japan are not at all affecting U.S. national security but rather are contributing to U.S. employment and the economy," Seko told a news conference.

U.S. President Donald Trump last week proposed tariffs of 25 percent on steel and 10 percent on aluminium. That prompted Canada, Mexico and the European Union to threaten counter-steps if the plan, based on Section 232 of a 1962 U.S. law that allows such tariffs based on "national security", went ahead.

Peter Navarro, director of the White House National Trade Council, said countries will not be excluded from the tariffs but there will be a mechanism for some corporate exemptions, raising hopes some Japanese products will be exempted.

Any steps Japan does take in response to U.S. tariffs would be consistent with rules of the World Trade Organisation (WTO), said a Japanese government source, who declined to be identified because he was not authorised to speak to media.

"We wouldn't stand idly by, but ... if we did the same thing as the United States by taking steps that are against WTO rules, that would be like a children's spat."

Japanese Prime Minister Shinzo Abe, who has forged close ties with Trump, is wary of confrontation over trade since keeping Tokyo and Washington on the same page on North Korea is a top priority, experts said.

"The security issue looms much larger now. I don't think they want to set off Trump," said Jeffrey Kingston, director of Asian studies at Temple University's Japan campus.

"You don't get what you want by getting in his face, but by making it seem he's getting a better deal," he added.

Also on Tuesday, Abe spoke by phone about the tariffs and other matters with Canadian Prime Minister Justin Trudeau and Australian Prime Minister Malcolm Turnbull, Japan's foreign ministry said.

All three countries belong to an 11-member Asia-Pacific trade pact to be signed on Chile on March 8. Japan took the lead in forging the deal after Trump pulled the United States out of a 12-nation predecessor, the Trans-Pacific Partnership.

Seko is arranging a visit to China this month and the proposed U.S. tariffs would come up then, Jiji news agency said. A ministry official was not immediately available to comment on the report.

(Additional reporting by Kaori Kaneko; Editing by Simon Cameron-Moore)