Less than two months after President Donald Trump imposed steep aluminum and steel tariffs, he said Monday that the tariffs will be delayed by at least 30 days for key U.S. allies, including Canada, Mexico and the European Union. Trump also permanently exempted Argentina, Australia and Brazil from the tariffs.
Hours before prior exemptions were set to expire, the White House announced that it would be extending its negotiations with Mexico, Canada and the EU for an additional 30 days as details of agreements that would restrain imports and protect national security are ironed out.
The 25-percent tariff on steel imports and 10-percent tariff on aluminum imports went into effect March 23, but Canada, Mexico, Brazil, the EU, Australia and Argentina were initially granted a temporary exemption. South Korea was also granted a permanent exemption.
Why It’s Important
Trump’s metal tariffs have increased international tensions with major U.S. trading partners, particularly China. Trump has blamed China for flooding the market with steel and aluminum, making it difficult for U.S. producers to compete and potentially creating a national security risk for the U.S.
China has retaliated with tariffs of its own on U.S. food imports.
It’s not surprising that Mexico and Canada were granted extensions ahead of the next round of NAFTA talks scheduled for May 7, according to Height Capital Markets. Trump is likely attempting to use the tariffs as leverage in those NAFTA negotiations.
Height said the U.S. has reached an impasse with EU negotiators.
“We expect that this impasse remains, but that Trump, seeking additional leverage over the Europeans in negotiations on both trade and security issues, chose to hold the tariff exemption open to force additional cooperation."
Reuters reports that a person familiar with the situation said the U.S. will grant no further extensions on the tariffs if deals are not reached by the new June 1 deadline.
What Is A Tariff And What Does It Do?
13 Stocks And ETFs To Watch Amid China's 25% Tariff Threat
See more from Benzinga
- This Day In Market History: WSJ Interest Rate Headline Tanks Market
- After 65 Years, North And South Korea Will Formally Bring An End To The Korean War
- 3% Treasury Yield Triggers Puzzling Market Reaction
© 2018 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.