The U.S. will grant the European Union and some other countries a temporary exemption from aluminium and steel tariffs, averting a trade war with key allies as the Trump administration tailors penalties to target China.
U.S. Trade Representative Robert Lighthizer told the Senate Finance Committee on Thursday that the Trump administration would temporarily exempt some countries "based on a certain set of criteria" from steel and aluminum tariffs while they negotiate with the United States.
In addition to the EU, those exempt are Argentina, Australia, Brazil and South Korea, Lighthizer said. President Donald Trump had already granted exemptions to Mexico and Canada when he signed the tariffs earlier this month.
"There are countries with whom we're negotiating and the question becomes the obvious one that you think, as a matter of business, how does this work? So what he has decided to do is to pause the imposition of the tariffs with respect to those countries," Lighthizer said.
Trump's tariffs had sparked outrage among European officials, who lobbied hard for an exemption, citing the continent's long-standing military alliance and close economic ties to the United States.
The European Commission, the EU executive body, had threatened to retaliate by imposing trade penalties on a long-list of American products, worth some $3.4 billion in annual trade.
Though Trump has repeatedly singled out China for unfair trade practices, the European Union stood to lose more than Beijing from U.S. steel and aluminum tariffs. The bloc would have potentially suffered a loss of at least $2.4 billion, compared with a loss of $400 million for China.
That's because the European Union is one of the largest sources of U.S. steel imports. The 28-nation bloc exported 5.3 million metric tons of steel to the U.S. in 2017, second only to Canada. In dollar terms, it was the largest source of U.S. steel imports last year at a value of $6.6 billion.
Trump announced a package of up to $60 billion in tariffs on Thursday that penalizes China for intellectual property theft. EU countries have also expressed concern about steel dumping by China and forced technology transfers as a condition of doing business in the country.
— Reuters contributed to this report