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US defense chief prefers targeted steel, aluminum tariffs

The U.S. Department of Defense said it would prefer a system of targeted tariffs on steel and aluminum imports, rather than a global tariff or quota as recommended by the Department of Commerce, Reuters reported.

U.S. Defense Secretary James Mattis, in an undated memo posted Feb. 22 on the Commerce Department's website, said he was concerned about the potential impact of the proposed measures on U.S. allies.

"It is critical that we reinforce to our key allies that these actions are focused on correcting Chinese overproduction and countering their attempts to circumvent existing anti-dumping tariffs — not the bilateral U.S. relationship," said Mattis.

The Commerce Department on Feb. 16 recommended that President Donald Trump impose steep curbs on steel imports from China and other countries. It recommended a global tariff of at least 24% on imports of steel and 7.7% on aluminum.

Other options called for higher and more targeted tariffs against China and a limited list of countries or blanket quotas meant to peg U.S. imports of both metals to a fraction of their 2017 steel exports to the U.S.

Trump has until April to decide whether to adopt any of the recommendations, U.S. Commerce Secretary Wilbur Ross said.

Mattis said since direct defense needs account for only about 3% of U.S. production, the proposed curbs would not damage the Pentagon's ability to obtain steel and aluminum to meet national defense requirements.

He said while tariffs on steel should proceed, the Trump administration should wait before implementing the measures on aluminum.

"The prospect of trade action on aluminum may be sufficient to coerce improved behavior of bad actors," Mattis said.