The Trump administration has announced that the European Union, Australia, Argentina, Brazil and South Korea will be exempt from the 25% steel and 15% aluminum tariffs the President announced earlier this month.
The President’s tariff announcement angered many longstanding allies and set off a flurry of backroom diplomacy as countries sought exemptions and threatened retaliatory measures if they weren’t granted. President Trump subsequently announced Canada and Mexico would be excluded from the Tariffs, as long as a more equitable of NAFTA, the North American Free Trade Agreement, is signed between the countries.
“We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed,” the President wrote on Twitter at the time.
Both countries had threatened retaliatory measures if they weren’t exempted. “We will continue to engage with all levels of the American administration in the coming days so that they understand that this proposal is unacceptable,” Canadian Prime Minister Justin Trudeau said in the wake of the announcement.
Mexico said it would have “no option” to retaliate if an exemption is not granted. NAFTA is currently being renegotiated by all three countries, with talks set to enter their eighth round.
It was also announced that the administration was engaged in deep negotiations to exclude Australia from the tariffs. “Spoke to PM @TurnbullMalcolm of Australia. He is committed to having a very fair and reciprocal military and trade relationship. Working very quickly on a security agreement so we don’t have to impose steel or aluminum tariffs on our ally, the great nation of Australia!” the President wrote on Twitter earlier this month.
The U.S. gets the majority of its steel from Canada, Brazil, South Korea, Mexico and Russia. Those five countries account for 58% of all steel imports to the country. The U.S. imports steel from fifty different countries the world over.
The Commerce Department found, after a lengthy review that rising imports of steel and aluminum threatened U.S. national security. The President has cited those findings many times in defending his decision. “If you don’t have steel, you don’t have a country,” he’s said.
Commerce Secretary Wilbur Ross and European Commissioner for trade Cecilia Malmstrom met this week to discuss the levies. Ross believes that while the majority of the problem stems from overcapacity from China, the EU also contributes to the excess-supply problem.
“We think the EU, in a whole variety of different ways, is part of the problem. Steel that comes in the form of an automobile from Germany is every bit as much of a problem as steel that comes in as steel,” Ross said.