(Adds Trump speaking with Australian PM Turnbull)* Treasury Secretary Mnuchin opens way for more exemptions
* Japan, EU deny exports threaten U.S. national security* Brazil, Argentina, South Korea, Australia want waivers* Top trade academic dubs Trump tariffs "small potatoes"
* Chinese steel makers demand retaliation on coalBy Lindsay Dunsmuir, Robin Emmott and Ruby LianWASHINGTON/BRUSSELS/SHANGHAI, March 9 (Reuters) - The UnitedStates opened the way for more exemptions from its steel andaluminum tariffs on Friday, after pressure from allies andintense lobbying from lawmakers, further diluting the measuresjust a day after they were formally announced.President Donald Trump, who has broad powers to impose thetariffs of 25 percent on steel imports and 10 percent onaluminum, at the outset granted exemptions to Canada and Mexico,and said there would be the possibility of industry exemptions,although he has not been specific.After Trump opened the door, Brazil, Japan, South Korea, Australia and Europe clamored for special treatment, whileChinese producers called on Beijing to retaliate in kind.Trump tweeted on Friday that he spoke with Australian PrimeMinister Malcolm Turnbull about trade and military cooperation."Working very quickly on a security agreement so we don't haveto impose steel or aluminum tariffs on our ally, the greatnation of Australia!" Trump said.Treasury Secretary Steven Mnuchin earlier said he expectscountries in addition to Mexico and Canada to be exempted in thenext couple of weeks.When proposed tariffs were initially announced, stockmarkets went into a tail spin on concerns they would ignite aglobal trade war. But since Trump signaled that exemptions werepossible, reaction has been measured, and counter threats havebeen carefully calibrated so far.Those threats have been overblown, according to Dani Rodrik,professor of international political economy at HarvardUniversity's John F. Kennedy School of Government and one of theworld's leading experts on trade."The reality is that Trump's trade measures to date amountto small potatoes. In particular, they pale in comparison to thescale and scope of the protectionist policies of PresidentRonald Reagan's administration in the 1980s," Rodrik wrote onFriday.
CHINA VOWTokyo and Brussels rejected any suggestion that theirexports to the United States threatened the country's nationalsecurity - Trump's justification for imposing the tariffsdespite warnings at home and abroad that they could provoke aglobal trade war."We are an ally, not a threat," European Commission VicePresident Jyrki Katainen said. China's metals industry issued the country's most explicitthreat yet in the row, urging the government to retaliate bytargeting U.S. coal - a sector that is central to Trump'spolitical base and his election pledge to restore Americanindustries and blue-collar jobs. Brazil, which after Canada is the biggest steel supplier tothe U.S. market, said it wanted to join the exemption list, and Argentina made a similar case.
Japan, the United States' top economic and military ally inAsia, was next in line. Chief Cabinet Secretary Yoshihide Sugatold a news conference that Japan's steel and aluminum shipmentsposed no threat to U.S. national security.
The European Union, the world's biggest trade bloc, chimedin. "Europe is certainly not a threat to American internalsecurity so we expect to be excluded," European TradeCommissioner Cecilia Malmstrom said in Brussels.Malmstrom told reporters the EU was ready to complain to theWorld Trade Organization, and retaliate within 90 days. She willmeet with U.S. Trade Representative Robert Lighthizer andJapanese Trade Minister Hiroshige Seko in Brussels on Saturdaywhen she will ask whether the EU is to be included in thetariffs.Malmstrom won support from German Chancellor Angela Merkel.Shares in European steel makers fell, although Germany's twobiggest producers, Thyssenkrupp and Salzgitter , have insisted the impact on them will be limited.The target of Trump's ire is China, whose capacityexpansions have helped add to global surpluses of steel. Chinais also the potential target of far more wide-ranging U.S.action over what Washington says is its theft of intellectualproperty and coercion of U.S. firms to share commercial secrets.Beijing vowed to "firmly defend its legitimate rights andinterests." Tariffs would "seriously impact the normal order ofinternational trade," the Commerce Ministry said. Last year, China imported 3.2 million tonnes of U.S. coal,worth about $420 million and nearly five times the amount ittook in 2016. Trump has championed coal exports as demand frompower firms at home weakens.The dispute has fueled concerns that soybeans, the UnitedStates' most valuable export to China, might be caught up in therow after Beijing launched an inquiry into imports of U.S.sorghum, a grain used in animal feed and liquor. South Korea, the third-largest steel exporter to the UnitedStates and a strategic ally on the Korean peninsula, called forcalm. "We should prevent a trade war situation from excessiveprotectionism, in which the entire world harms each other,"Trade Minister Paik Un-gyu told a meeting with steelmakers.
While carrying a message to Washington to push forward adiplomatic breakthrough over North Korea, South Korea's nationalsecurity office chief Chung Eui-yong asked U.S. officials tosupport Seoul's request for a waiver, a presidential spokesmansaid. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^GRAPHIC: U.S. steel products imports interactive How would Trump's tariff affect the cost of the Boeing 737? IMG ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Adam Jourdan, Wang Jing, YukaObayashi, Kaori Kaneko, Ami Miyazaki, Ju-Min Park, Hyunjoo Jin,Cynthia Kim, Robert-Jan Bartunek, Eric Beech and Alissa deCarbonnel; Writing by David Stamp and David Chance; Editing byToby Chopra, Susan Thomas and Leslie Adler)
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