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US eyes carve-outs for Canada, Mexico: Update

07 Mar 2018 22:55 GMT
US eyes carve-outs for Canada, Mexico: Update

Adds comments.

Houston, 7 March (Argus) — Canada and Mexico could be exempted from US President Donald Trump's proposal to impose stiff tariffs on imported steel and aluminum, the White House said today.

The statement signals deep divisions in the administration on the proposed measure.

"There are potential carve-outs for Mexico and Canada based on national security and possibly other countries as well based on that process," the White House said. It said Trump will "sign something by the end of the week."

Just what exactly Trump will sign remains unclear. Trump last week announced plans to impose a 25pc tariff on all steel imports and a 10pc tariff for aluminum. He said Canada and Mexico could be exempt from tariffs if they sign a "new and fair" North American Free Trade Agreement (Nafta). Canada is the largest exporter of steel to the US. Canada's prime minister Justin Trudeau yesterday told Trump the introduction of tariffs would "not be helpful" to reaching an agreement.

Republicans in the US Congress want the administration to reconsider the tariffs, fearing domestic job losses and retaliatory tariffs on US agricultural commodities and other exports. US treasury secretary Steven Mnuchin yesterday told lawmakers that the administration was not trying to start a trade war. Trump appeared to contradict his Cabinet member's remarks, saying that a trade war would hurt foreign countries more given the large US trade deficit.

Energy secretary Rick Perry, speaking at the CERAWeek conference in Houston today, said Trump has not made up his mind and assured energy industry leaders the administration will make sure the sector remains viable and strong economically.

The announcement has sent shivers through the industry concerned about the negative effect of retaliatory trade measures by foreign countries on exports of US crude oil, natural gas and other energy commodities.

But Perry highlighted the benefits of free trade.

"It is in our best interest to remove as many barriers as we can, to trade, to send a message around the world that this is a region of people with common interests," Perry said during a session alongside Mexico's energy minister Joaquin Coldwell and Canada's minister of natural resources Jim Carr.

The three said that the energy sector trade between the three countries is a positive example, and twice the size of that for other goods and services.

Both Perry and Carr said that Mexico's massive energy sector reform of recent years has been extremely positive for the three countries.

But the slow progress of Nafta talks likewise is of concern to the industry as Mexico is a growing market for US natural gas and refined products.

Mexico and Canada were granted exemptions from steel tariffs imposed by the US in 2002 as it would have faced penalties under Nafta otherwise. But Trump's trade adviser Peter Navarro has said no country should be exempt from the tariff proposal.