Global race is on for exclusion from tariffs

With the stroke of a pen, President Donald Trump has set off a race among nations and companies to win relief from his steel and aluminum tariffs.

As expected, Trump slapped a 25 percent tariff on steel imports and 10 percent on aluminum on Thursday. But he showed more leniency than initially thought. The U.S. excluded Mexico and Canada, a concession that will remain in place as long as they reach agreement on a new North American Free Trade Agreement that meets U.S. satisfaction.

More broadly, Trump threw the door open to further exclusions for countries and niche products, raising questions about whether the tariffs will have the intended effect of shoring up the domestic steel and aluminum industry to protect U.S. national security.

While this may keep trading partners from unleashing immediate retaliation, it could all backfire by antagonizing American allies.

The president has invited “any country with which we have a security relationship” to discuss “alternative ways” to address the security risks of steel and aluminum imports, a process that could lead to other countries being excluded, according to official proclamations Trump signed at the White House. Trump said his top trade negotiator, Robert Lighthizer, will be in charge of working out deals with other countries on possible exemptions.

Trump has also given Commerce Secretary Wilbur Ross the power to provide relief to specific steel and aluminum products that aren’t produced in the U.S. “in a sufficient and reasonably available amount or of a satisfactory quality.”

Government and companies are already lining up for a break. European Union trade chief Cecilia Malmstrom noted Europe’s close alliance with the U.S. and argued “the EU should be excluded from these measures.” The U.S. beer industry has asked Trump not to impose the tariffs on aluminum used in beer cans.

Trump may now attempt to use the tariffs as leverage to secure deals favorable to the U.S. For example, the U.S. has been pushing EU countries to meet their commitment under the North Atlantic Treaty Organization to spend two percent of their gross domestic product on defense.

Trump’s authority to establish the tariffs stems from a Commerce Department investigation that found that imports of the metals pose a risk to national security. The probes were authorized under the seldomused Section 232 of the 1962 Trade Expansion Act, which gives the president broad powers to impose trade restrictions on domestic security grounds.

The tariffs will start in 15 days.