President Donald Trump's administration will announce Monday that it would extend exemptions to steel and aluminum tariffs for some of the US's closest allies, avoiding the start of a possible trade war according to a new report.
According to multiple reports,Trump decided to postpone imposing the tariffs and extend exemptions that will allow the countries to continue exporting metals to the US without being subject to a 25% tariff on steel and 10% tariff on aluminum.
The exemptions will be extended until June 1, according to the reports, and would give the US and the exempted nations more time to work out deals to help reduce trade imbalances.
A White House spokesperson did not immediately respond to a request for comment.
Trump originally did not plan to exempt any countries. But similar to his other moves on trade, Trump backed down on the threat. A half-dozen allies were eventually granted a temporary exemption: Argentina, Australia, Brazil, the European Union, Canada, and Mexico.
As part of the agreement, South Korea will also secure a permanent exemption from the tariffs in exchange for an annual quota on Korean metal exports to the US.
The exemptions are significant because the countries represent a large percentage of imported steel and aluminum. Five of the top 10 steel exporters to the US were provided exemptions and two exempted countries, Canada and Argentina, make up 55% of all aluminum imported by the US.
In addition to the direct economic consequence of the exemptions, the move also prevents those countries from taking retaliatory action against the US.
French President Emmanuel Macron and German Chancellor Angela Merkel were in Washington, DC, to meet with Trump last week, and both stressed the need to keep open the trade channels between the EU and the US. But, in the event that Trump did not grant extensions, the EU threatened to impose tariffs on the US.
For now, these actions, and a probable trade war, are likely to be delayed by Trump's extension.
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