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Mexico, Canada and others may be exempt from US tariffs

Press secretary Sarah Huckabee Sanders said exemptions would be made on a ‘case by case’ and ‘country by country’ basis.

The White House has said Mexico, Canada and other countries may be spared from President Donald Trump’s planned steel and aluminium tariffs under national security “carve-outs”.

The move could soften the blow amid threats of retaliation by trading partners and dire economic warnings from lawmakers and business groups.

Press secretary Sarah Huckabee Sanders told reporters the exemptions would be made on a “case by case” and “country by country” basis, a reversal from the policy articulated just days ago that there would be no exemptions from Mr Trump’s plan.

The announcement came as congressional Republicans and business groups braced for the impact of expected tariffs of 25% on imported steel and 10 percent on aluminium, appearing resigned to additional protectionist trade actions as Trump signalled upcoming economic battles with China.

White House press secretary Sarah Huckabee Sanders told reporters of the exemptions (Susan Walsh/AP)

The looming departure of White House economic adviser Gary Cohn, a former Goldman Sachs executive who has opposed the promised tariffs, set off anxiety among business leaders and investors worried about a potential trade war.

The White House said Mr Trump was expected to make a final announcement by the end of the week and officials were working to include language in the tariffs that would give Mr Trump the flexibility to approve exemptions for certain countries.

“He’s already indicated a degree of flexibility, I think a very sensible, very balanced degree of flexibility,” Commerce Secretary Wilbur Ross told CNBC.

“We’re not trying to blow up the world.”

Mr Trump signalled other trade actions could be in the works. In a tweet, he said “the U.S. is acting swiftly on Intellectual Property theft”.

A White House official said Mr Trump was referencing an ongoing investigation of China in which the US trade representative is studying whether Chinese intellectual property rules are “unreasonable or discriminatory” to American business.

The official, who spoke on the condition of anonymity to discuss internal deliberations, said an announcement on the findings of the report — and possible retaliatory actions — was expected within the next three weeks.

Business leaders, meanwhile, continued to sound the alarm about the potential economic fallout from tariffs, with the president and CEO of the US Chamber of Commerce raising the spectre of a global trade war.

That scenario, Tom Donohue said, would endanger the economic momentum from the GOP tax cuts and Mr Trump’s rollback of regulations.

He added: “We urge the administration to take this risk seriously.”

House Speaker Paul Ryan and other Republican allies have urged Donald Trump to back off his threat and avoid a possible trade war (J. Scott Applewhite/AP)

The president has said the tariffs are needed to reinforce lagging American steel and aluminium industries and protect national security.

He has tried to use the tariffs as leverage in ongoing talks to revise the North American Free Trade Agreement, suggesting Canada and Mexico might be exempted from tariffs if they offer more favourable terms under NAFTA.

Lawmakers opposed to the tariffs, including House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell, have suggested more narrowly focused approaches to target Chinese imports.

But members of Congress have few tools at their disposal to counter the president, who has vowed to fulfil his campaign pledge.

“I don’t think the president is going to be easily deterred,” said Senator John Cornyn, who has suggested hearings on the tariffs.

Senator Lamar Alexander said Mr Trump had listened to him and others who disagree with the direction of the trade policies.

He added: “I thank him for that and he’s been a good listener. The difficulty is so far I haven’t persuaded him.”

Republicans in Congress have lobbied administration officials to reconsider the plan and focus the trade actions on China, warning that allies such as Canada and members of the European Union would retaliate.

The EU said it was prepared to respond to any tariffs with counter-measures against U.S. products such as Harley-Davidson motorcycles, Levi’s jeans and bourbon. EU Trade Commissioner Cecilia Malmstroem said the EU was circulating among member states a list of U.S. goods to target with tariffs so it could respond quickly.

The president plans to rally Republicans in western Pennsylvania on Saturday in support of Rick Saccone, who faces Democrat Conor Lamb in a March 13 special House election. Mr Trump has told associates the tariffs could be helpful to the GOP cause in the election in the heart of steel country.

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