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US trade representative says talks underway about exempting EU from steel, aluminum tariffs

Washington β€” The US is in talks with the European Union, Australia and Argentina, and may soon begin talks with Brazil, about exclusions from tariffs on steel and aluminum set to go into effect this week, US Trade Representative Robert Lighthizer told the House of Representatives Ways and Means Committee Wednesday.

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If the EU were to be excluded promptly, that could offer significant relief to oil and gas pipeline developers because the bloc's members make up a substantial share of line pipe suppliers, when combined with Canadian supplies, which already have a carve-out.

Lighthizer's comments come as the Trump administration's proposed 25% tariff on steel imports and 10% tariff on aluminum imports are scheduled to kick in on Friday.

He noted that North American Free Trade Agreement members are already excluded from the tariffs, subject to certain conditions and successful NAFTA negotiations, and said there is a "similar circumstance" with South Korea because of talks underway about the US-Korea Free Trade Agreement.



"There have been other countries that come up and that I believe we are in process of talking to now -- Australia, Argentina and the EU, I would put in those in those categories," he said.

Such additional exemptions could come before negotiations are concluded, he said.

Lighthizer said he believed that as the US comes to agreements with some countries, they "will be in a position where the duties will not apply to them during the course of negotiations, so that you don't have the situation where you have the status quo, 25% tariffs, and then they get out and there's this kind of bump and it changes commercial relationships."

The hope is to "have this part of the process resolved" by the end of April, he said, although President Donald Trump has the authority to provide countries with exemptions at any time if he believes it is in the national security interest.

Secretary of Commerce Wilbur Ross also put out a joint statement with the European Commissioner for Trade Cecilia Malmstrom affirming that such talks. ""We have agreed to launch immediately a process of discussion with President Trump and the Trump administration on trade issues of common concern, including steel and aluminum, with a view to identifying mutually acceptable outcomes as rapidly as possible," they said.

US oil and gas pipeline companies and LNG developers have argued that the specialty steel they use is not always sufficiently available from domestic mills.

While the exemption for Canada offered some relief, the Interstate Natural Gas Association of America has noted that 65% of high-strength plate/coil imports and large-diameter line pipe imports are from NATO countries.

"The proportion grows to approximately 80% when adding treaty nations, such as Japan and South Korea," INGAA President Don Santa said recently.

"We'd welcome any additional flexibility," INGAA spokeswoman Cathy Landry said Wednesday. There are a number of countries in Europe that make steel pipe or material used to make pipe, she noted.

Josh Zive, a trade lawyer with Bracewell in Washington, said Lighthizer's comments "certainly seem to support an optimistic outlook for many of the countries seeking exceptions, but I think we have to wait to see the level of pushback they get from steel producers before knowing what will happen."

Exempting the range of countries Lighthizer identified would help minimize the burdens of the tariffs on consuming industries, he added.

--Maya Weber, maya.weber@spglobal.com
--Edited by Keiron Greenhalgh, newsdesk@spglobal.com