Treasury Secretary urged Trump to exempt Canada from steel and aluminum tariffs: Sources

At a White House trade meeting on Tuesday, Treasury Secretary Steven Mnuchin urged President Donald Trump to exempt Canada from steep steel and aluminum tariffs, two senior administration officials and two sources close to the White House tell ABC News.

Mnuchin presented the option to Trump in a meeting of the administration’s most senior economic policymakers, including director of the National Economic Council Larry Kudlow, Commerce Secretary Wilbur Ross, Trade advisor Peter Navarro, trade representative Robert Lighthizer and chief of staff John Kelly.

After returning from the G-7 finance ministers summit in Canada, Mnuchin made the case that the U.S. has a $2 billion steel surplus with Canada and a nearly $26 billion services surplus, and should consider making an exemption for its northern neighbor, according to the sources.

But not all of the advisers were in agreement, according to two sources familiar with the conversations. They say the group has been known to harbor ideological differences on major economic issues and the meeting adjourned without any clear resolution to the matter.

“He’s still deciding on what to do about Canada,” said one senior administration official on the President’s response to the request for leniency.

President Trump's decision to impose tariffs on allies including Canada and the European Union has stoked fears of a trade war and is expected to be at the top of the agenda when Trump meets face-to-face with the world's economic powers at the G-7 summit in Canada on Friday.

So it's no surprise that at the G7 finance minister’s summit last Saturday, Mnuchin faced blowback from allies. In a rare move, Canada, Italy, Germany, France, Japan and the United Kingdom issued a joint statement requesting that Mnuchin express their "unanimous concern and disappointment” to President Trump.

Throughout the weekend, foreign leaders often referred to it as to the "G-6 plus 1," suggesting the United States had alienated itself from the group.

On Sunday, Canadian Prime Minister Justin Trudeau called the tariffs “insulting” in an interview with NBC News.

“The Canadians made an impassioned personal plea to Mnuchin to take the case up with Trump,” an administration official said.

According to the United States Trade Representative’s office, the U.S. had a $17.5 billion dollar goods deficit with Canada in 2017, but an overall surplus of $8.4 billion with Canada in 2017, with services, are included.

The 25 percent tariff on imports of steel and 10 percent on imports of aluminum went into effect on June 1, after a short exemption period for Canada, Mexico, and the European Union.

The U.S. has been in trade negotiations with Mexico and Canada for months over the North American Free Trade Agreement.

Kudlow said Tuesday on Fox News that the president is “seriously considering” negotiating with Canada and Mexico separately, and forming two bilateral trade agreements.

A White House and Treasury spokesperson did not respond to a request for comment.