WASHINGTON—U.S. President Donald Trump has exempted Canada and Mexico from his steel and aluminum tariffs, but he says he might change his mind later if two countries don’t agree to a fair North American Free Trade Agreement.

Resisting furious global pressure, Trump declined to grant immediate exemptions to any other countries. He said everyone else can negotiate with his trade chief.

His decision on Thursday to exempt Canada conditionally — but immediately — is a partial victory for Canadian steel producers and for Prime Minister Justin Trudeau’s government after a frantic week of high-stakes diplomacy. Trump initially said he would give Canada no special treatment, then insisted he would lift a tariff on Canada only when the NAFTA impasse was resolved.

Still, his decision fell far short of the full, final tariff exemption sought by Trudeau and numerous senior members of Trump’s own party. It ensures that a tariff cloud will hover indefinitely over the rocky NAFTA talks.

“We’re negotiating right now NAFTA. And we’re going to hold off the tariff on those two countries to see whether or not we’re able to make the deal on NAFTA. National security, very important aspect of that deal,” Trump said at the White House, flanked by Vice-President Mike Pence and steelworkers. “And, if we’re making the deal on NAFTA, this will figure into the deal, and we won’t have the tariffs on Canada or Mexico.

“If we don’t make the deal on NAFTA, and if we terminate NAFTA because they’re unable to make a deal that’s fair for our workers and fair for our farmers … .” He did not finish the sentence.

Foreign Affairs Minister Chrystia Freeland called the exemption “a step forward.” She said the government continues to view NAFTA and the tariff threat as “quite distinct issues,” and she said its approach to the NAFTA talks would not be altered by Trump’s attempt to link the two.

“Our approach has been consistent since the negotiations began last year. Today’s announcement does not change that. We know a fair deal — a win-win-win deal — is within reach,” she said in Toronto.

Freeland said it was “inconceivable” that Canada could pose a security threat to the U.S., and added that any tariffs imposed on that basis, which is Trump’s official basis for these tariffs, would be “unacceptable.”

Trump signed a proclamation imposing the tariffs in 15 days on countries outside North America. The tariffs will be 25 per cent on steel products, 10 per cent on aluminum products. They will likely produce significant changes in global markets for both, and the ripple effects may spread throughout the U.S. economy.

Countries around the world have threatened retaliation — the European Union has compiled a list of dozens of American products, from peanut butter to makeup, to target with tariffs — and top Republicans told Trump they were worried about a possible trade war. But Trump, noting that he has supported tariffs for decades, said the move was not a choice, but a “necessity,” given the “decimation” of American communities by “aggressive” steel and aluminum imports.

“Our factories were left to rot and to rust all over the place. Thriving communities turned into ghost towns. Not any longer,” he said.

The text of the proclamation was more positive toward Canada than Trump was in his remarks. “I conclude that Canada and Mexico present a special case,” it quoted him as saying.

The best solution, the proclamation said, “is to continue ongoing discussions” with U.S. neighbours, “given our shared commitment to supporting each other in addressing national security concerns, our shared commitment to addressing global excess capacity for producing aluminum, the physical proximity of our respective industrial bases, the robust economic integration between our countries, the export of aluminum produced in the United States to Canada and Mexico, and the close relation of the economic welfare of the United States to our national security.”

There is sometimes little relationship between Trump’s words in staff-written documents and the personal views that drive his decisions. Jerry Dias, president of the Unifor union that represents Canadian auto and aluminum workers, said Trump’s decision to link the tariffs to NAFTA amounts to “economic blackmail.”

“You’re dealing with an administration that doesn’t want to deal anyway. And we need to be candid about that,” said Dias, whose union also represents unionized employees at the Toronto Star.

Mickey Kantor, former U.S. commerce secretary and trade chief under Bill Clinton, took issue with Trump’s threat.

“I think blackmail is not something anyone should carry out in country-to-country relations,” Kantor said in an interview. “Is that clear enough?”

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Joseph Galimberti, president of the Canadian Steel Producers Association, said they “welcome the exemption.” Efforts to convey to the administration the benefits of steel trade with Canada “can be said to have paid off in this instance,” he said, and the producers will continue to press their case.

Ottawa trade strategist Peter Clark said: “I guess you shouldn’t look a gift president in the mouth. But it’s not a really generous gift.” He said the White House was clearly attempting to clean up the “embarrassing mess” Trump created with his haphazard initial announcement.

Speaking before Trump on Thursday, a senior administration official had suggested that the tariffs would not be tied specifically to the outcome of NAFTA talks. Rather, he said, they would be tied to broader discussions about “our security relationship,” of which NAFTA is one part.

The official’s use of such language appeared to be an attempt to defend against potential legal problems Trump may have created with the World Trade Organization by tying a possible exemption for Canada and Mexico to the overall state of continental trade when the official justification for the tariffs is that steel and aluminum imports threaten U.S. national security.

But Trump dispensed with the facade; in his speech, he mentioned national security only in passing with regard to Canada and Mexico, spending most of his time on NAFTA.

Canada has adopted a posture of non-confrontation in response to Trump’s NAFTA threats of all kinds. Trudeau’s government has promised prompt retaliation for any steel and aluminum tariffs, but it has repeatedly vowed to remain at the NAFTA negotiating table as long as the U.S. is interested in negotiating.

The three countries remain sharply divided on several major NAFTA issues, including automotive manufacturing and government procurement. The seventh round of negotiations concluded Monday without major progress.

Trump’s Republican predecessor, George W. Bush, exempted Canada and Mexico, along with many other countries, from the steel tariffs he imposed in 2002. Dozens of party members want Trump to offer the same kind of complete, unconditional exemption. Trudeau spoke Thursday with House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell, who have been sympathetic to Canada’s positions.

Canada is the top exporter of both steel and aluminum to the U.S. Although Trump has framed his tariffs as a response to unfair Chinese dumping of cheap steel, China ranks 11th on the U.S. list. Canada’s steel industry, concentrated in Ontario, and its aluminum industry, concentrated in Quebec, say tariffs could cause them severe harm.

Chrystia Freeland says the government will push for Canada’s provisional reprieve on U.S. steel and aluminum tariffs to become a permanent exemption. The foreign affairs minister says Canada views NAFTA as a separate negotiation. (The Canadian Press)

The decision on Canada and Mexico is more evidence of the impulsiveness and unpreparedness with which Trump often makes policy. The process of unveiling the tariffs has been exceptionally chaotic even by his own standards.

Last Thursday, before his team had come close to finalizing the details of a tariff plan, Trump announced that he would hit every country in the world with tariffs of 25 per cent on steel and 10 per cent on aluminum. Then, in a tweet on Monday, he said Canada and Mexico could eventually be exempted, but only when they agreed to a “fair” new NAFTA.

That did not satisfy Republican critics, and Canada had continued to threaten retaliation. On Wednesday, press secretary Sarah Sanders said Canada might get an exemption “based on national security.” White House officials anonymously floated the possibility of a 30-day exemption linked to NAFTA, and they said Trump would hold a signing ceremony to impose the tariffs formally on Thursday afternoon.

But other officials told reporters that there was nothing ready to sign, and the afternoon meeting was left off the presidential schedule released Wednesday night. Then, in the morning, Trump wrote on Twitter that he would hold the meeting after all.

Correction — Sept. 4, 2018: This article was edited from a previous version that mistakenly said Peter Clark is a trade lawyer. In fact, Clark is a trade strategist.

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