Skip to Content

Mexico and Canada Could Be Among Countries Exempt From Steel Tariffs, White House Says

President Donald Trump’s economic advisers defended U.S. plans to impose steel tariffs while leaving the door open for exempting some countries and downplaying the fallout of a possible trade war.

“We are the freest trader in the world, hands down,” White House trade adviser Peter Navarro told Bloomberg TV on Wednesday. “All we get for that is a half a trillion dollar a year trade deficit that offshores our wealth, offshores our jobs.” America’s trading partners are “getting the better part of the deal,” and have no incentive to get into “any conflict.”

The U.S. may exempt countries from the duties based on national security considerations, White House Press Secretary Sarah Sanders said Wednesday. She didn’t elaborate on how those determinations would be made and didn’t answer when asked which countries would qualify.

“There are potential carve outs for Canada and Mexico based on national security and possibly other countries as well. That would be a case-by-case and country-by-country basis,” Sanders told reporters at the White House.

Top administration officials blanketed the airwaves on Wednesday in defense of the plan that’s been criticized by Republicans, widely panned by corporate America, shaken global financial markets, and prompted the resignation of Trump’s top economic adviser Gary Cohn.

Deflecting the criticism, Trump hinted on Wednesday that his restrictions on trade could run even deeper, citing China’s alleged theft of intellectual property. The U.S. is said to be considering clamping down on Chinese investment and imposing tariffs on a broad range of goods to punish Beijing over unfair intellectual-property practices as part of an ongoing U.S. investigation ordered by Trump.

“The U.S. is acting swiftly on Intellectual Property theft. We cannot allow this to happen as it has for many years!,” the president said in a tweet.

The U.S. trade deficit widened to a post-recession high in January of $56.6 billion as exports declined, figures that could bolster Trump’s argument that the U.S. is losing in global trade. China accounted for almost half of the shortfall in a separate measure of the deficit in goods.

Republican lawmakers are pressuring Trump to at least curtail the tariffs by exempting certain products or nations. The plan is to have an announcement on tariffs this week and as early as Thursday, Treasury Secretary Steven Mnuchin said in an interview with Bloomberg TV.

Growth Spurt

The U.S. economy will enjoy a “tremendous spurt” in growth if the president follows through on his plans to cut taxes, deregulate industry, unlock U.S. energy resources and crack down on trade, Navarro said.

Meanwhile, International Monetary Fund Managing Director Christine Lagarde said the consequences of the U.S. imposing tariffs would be “serious” and could likely trigger a trade war that would be detrimental to global growth.

European Council President Donald Tusk said he opposed Trump’s earlier comments that trade wars are good and easy to win. “Trade wars are bad and easy to lose,” Tusk said at a press conference in Luxembourg.

The threat of retaliation and escalating tit-for-tat penalties damaging growth around the world is already rising. The European Union has warned it would respond with its own 25 percent tariff to hit $3.5 billion of American goods. The bloc is targeting iconic U.S. brands produced in key Republican states on a range of consumer, agricultural and steel products, according to a list drawn up by the European Commission.

No War

Mnuchin in an interview on Wednesday said the Trump administration is prepared to suffer retaliatory blows against the U.S. for steel and aluminum tariffs, but won’t flinch from the fight to make sure American products are treated fairly in international trade.

“Our objective is not to create a trade war but our objective is to make sure U.S. companies and workers are treated fairly,” he said by phone. Trade is a cornerstone issue of Trump’s economic agenda, along with tax cuts and deregulation, he said.

Commerce Secretary Wilbur Ross also signaled the administration is open to exempting countries besides Mexico and Canada, which is renegotiating the North American Free Trade Agreement with the U.S.

“The president indicated that if we can work something out with Canada and Mexico, they will be exempted. It’s not inconceivable that others could be exempted on a similar basis,”Ross said in an interview. “Whenever there’s a big change — an unexpected change — you have to expect some sort of a negative reaction. Let’s see how things come out over the longer term.”

Trump announced the planned tariffs on March 1, after a Commerce Department investigation found that imports of the metals pose a risk to national security. The probes were authorized under the seldom-used Section 232 of the 1962 Trade Expansion Act, that gives the president broad powers to impose trade restrictions on domestic security grounds.

Allied nations argue that they should be allowed exemptions, and the U.S. penalties should be focused on curbing China’s excess industrial capacity from flooding the world market.