U.S. to slap tariffs soon on steel, aluminum from EU - sources

WASHINGTON (Reuters) - The United States will announce plans to impose tariffs on steel and aluminum from the European Union as early as Thursday morning, two people briefed on the matter said, confirming a report in the Wall Street Journal.

The decision would land ahead of a Friday expiration deadline for exemptions to the planned metals tariffs amid stalled trade talks with the EU and would likely prompt retaliation from the bloc.

The two sources said an announcement was planned for Thursday morning in Washington but that the timing could still change.

The U.S. Commerce Department and U.S. Trade Representative's Office did not immediately respond to requests for comment.

President Donald Trump on March 23 imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum, but granted temporary exemptions to the EU, Canada, Mexico, Brazil, Australia and Argentina.

Trump invoked a 1962 trade law to erect protections for U.S. steel and aluminum producers on national security grounds, amid a worldwide glut of both metals that is largely blamed on excess production in China.

The European Commission, which coordinates trade policy for the 28 EU members, has said the bloc should be permanently exempted from the tariffs since it was not the cause of overcapacity in steel and aluminum.

The Commission has said the EU will set duties on 2.8 billion euros ($3.4 billion) of U.S. exports, including peanut butter and denim jeans, if its metals exports to the United States worth 6.4 billion euros ($7.5 billion) are subject to tariffs.

The tariffs, which have increased friction with U.S. trading partners worldwide and prompted several challenges before the World Trade Organization, are aimed at allowing the U.S. steel and aluminum industries to increase their capacity utilization rates above 80 percent for the first time in years.

Economists say the standoff with the EU could tip toward a trade war, particularly after Trump last week launched another national security investigation into car and truck imports that could lead to new U.S. tariffs.

The Trump administration has given permanent metals tariff exemptions to several countries including Australia, Argentina and South Korea, but in each case set import quotas.

Friday's deadline for exemptions also affects Mexico and Canada, which are in contentious negotiations with the United States on the North American Free Trade Agreement that Trump has said he wants to revamp, or abandon if the talks fail.

($1 = 0.8575 euros)

(Reporting by Eric Walsh and David Shepardson; Editing by Mohammad Zargham and Peter Cooney)