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Trump delays steel and aluminum tariffs, pulling back on major trade threat

President Donald Trump answers questions while meeting with Nigerian President Muhammadu Buhari in the Oval Office, at the White House in Washington, April 30, 2018. Trump said that he would not apologize for campaign statements calling for a “Muslim ban,” appearing to undercut an assertion at a Supreme Court argument April 25, 2018, from Solicitor General Noel Francisco. (Tom Brenner/Copyright 2018 The New York Times)

WASHINGTON - President Donald Trump at the last minute on Monday evening announced he would again postpone imposing tariffs on steel and aluminum imports from Canada, Mexico and the European Union, two people familiar with the decision said, pushing off a key economic decision while he tries to prod foreign leaders into making trade-related concessions.

The people said the White House had reached agreements on metals imports with Argentina, Australia, and Brazil, saying more details would be finalized in the next 30 days.

The contours of those agreements couldn't be immediately learned, though the White House had been pushing other nations to agree to quotas onexports to the U.S.

The sources spoke on the condition of anonymity because they weren't authorized to disclose the White House decision.

Trump has put off a decision on steel and aluminum tariffs with Mexico and Canada because he is trying to gain more access for U.S. businesses to their markets as part of a renegotiation of the North American Free Trade Agreement.

Canadian, Mexican and U.S. officials are meeting in Washington this week to discuss the plan.

Trump's strategy with the European Union is more fluid, as he has praised some countries, such as France, but chastised others, such as Germany, which he says needs to do allow U.S. companies more access to consumers.

The late announcement - the tariffs would have kicked in at midnight - are the latest unexpected directive in Trump's four-month effort to upend the U.S.'s trade relationship with more than a dozen countries. Some countries have received preferential treatment by agreeing to early changes, such as South Korea. Others, such as Japan, have been rebuffed despite repeated overtures from their leaders.

The Administration has reached agreements in principle on the metals trade with Argentina, Australia, and Brazil, details of which will be finalized in the next 30 days. The Administration is also extending negotiations with Canada, Mexico, and the European Union for a final 30 days.

The metals negotiations have been a key test of Trump's trade strategy and diplomacy, pitting his highly personal bargaining style against the determination of major U.S. trade partners and allies to hold fast and retaliate if necessary under World Trade Organization rules.

Trump has shown a willingness to both befriend and berate almost every ally and adversary, a dynamic that has played out in the past two months as he has tried to lure many of them into making concessions in exchange for delaying tariffs.

"We are in uncharted territory in terms of trade policy," said Chad Bown, a senior fellow at the Peterson Institute of International Economics. "What President Trump has done is make everything uncertain in trade policy. You don't know on almost a day-to-day basis what trade policy is going to be and businesses find it very difficult to operate in that kind of environment."

A high-powered delegation will go to Beijing to hold talks on trade Thursday, the White House announced. The group will include Mnuchin, Ross, U.S. Trade Representative Robert Lighthizer, National Economic Council head Larry Kudlow, and Peter Navarro, assistant to the president for trade and manufacturing policy. U.S. Ambassador to China Terry Branstad will join the group.

Earlier this year, the Commerce Department issued a report alleging that the United States' reliance on imported steel and aluminum posed a national security threat. In March, Trump used that finding to announce steep tariffs against China and Japan, temporarily offering exemptions for many other countries.

Ross said in an interview with The Washington Post that Trump was acting within his authority. He said that under Section 232 of a key U.S. trade law Trump "has very broad powers. He can raise the tariffs. He can lower them. He can let countries in and let them out."

In recent weeks, Trump has met with leaders from three U.S. allies caught in the middle of the tariff debate. French President Emmanuel Macron and German Chancellor Angela Merkel appealed last week to Trump to alter his stance, yet the administration has continued to press for concessions, and there is no guarantee that they will be spared.

European leaders have threatened countermeasures if Trump goes ahead with his proposed tariffs. The European actions would target items such as motorcycles and bourbon, which are produced in Republican electoral strongholds.

In March, the administration set aside tariffs it had proposed on South Korean steel and aluminum manufacturers. In return, South Korea amended its U.S.-Korea Free Trade Agreement, accepting quotas that will cut its steel exports to the United States by 30 percent below the average of the past three years.

The Trump administration has pushed European nations to adopt the same approach, but European leaders do not want to do so. "We are asking for them either to be in the tariff mode or to accept a quota," Ross said.

Quotas, however, are more appealing in some ways than tariffs, Bown said, because the governments of exporting countries get revenue by selling export permits to their own firms without paying anything to the U.S. government. The U.S. government would gain revenue from taxes on higher-priced steel and aluminum. Consumers would pay higher prices.

The role of China looms large in all these talks. South Korea is the third-largest steel exporter to the United States and the top importer of Chinese steel, which some trade experts say made it a conduit for Chinese exports to the United States.

The Chinese government in recent decades fostered massive domestic steel and aluminum industries, which have shipped their goods around the world in a way that pushed down prices. China accounts for about 3 percent of U.S. steel imports by value, but Trump says that the worldwide flood of cheap steel is one factor that has led to the closure of numerous U.S. smelters, and the loss of American jobs.

A number of other countries have agreed with U.S. officials for decades that China needs to do more to address a global oversupply of steel and aluminum, but so far they have taken measured steps at international gatherings to try to prod China toward change. Trump upended this approach by declaring he would act unilaterally, and threatening to slap tariffs on numerous U.S. allies, not just China.

"The Chinese have created the overcapacity problem," William Reinsch, senior adviser at the Center for Strategic and International Studies, said. "It's one of the few cases in the trade business where you can assign blame and be accurate. It's not that big a leap to say that if it is their fault it is not unreasonable to design a policy that pushes the problem back on them."