UK hopeful on U.S. steel tariffs exemption, business minister says

By Paul Sandle

LONDON (Reuters) - Britain will seek to persuade the U.S. government that its steel and aluminium products should avoid tariffs due to the sensitive role they play in the U.S. defence sector and its manufacturing supply chains, Britain's business minister said on Thursday.

U.S. President Donald Trump said on Sunday he would introduce new 25% tariffs on all steel and aluminium imports into the U.S., on top of existing metals duties, as part of his trade policy overhaul.

Britain's business minister, Jonathan Reynolds, said he agreed with the U.S. that there was over capacity around the world, but said: "there's a very strong case the UK is not the problem".

Speaking to an audience at an event in London, Reynolds said that the steel and aluminium exported by Britain to the U.S. tended to be "sensitive defence" products and parts that formed part of the wider U.S. manufacturing supply chain, and he would be seeking to negotiate on that basis.

"I'll be seeking to engage...I think there's a basis for discussion," he said.

He also highlighted the fact that Trump's trade policy was aimed at reducing the U.S. trade deficit in goods with the European Union and with China, not Britain.

Trump said earlier in February, when talking about tariffs in general, that he thought something could be "worked out" with Britain.

Britain and the United States trade hundreds of billions of dollars' worth of goods and services annually, but London hopes that ambiguities in the data will help to earn it an exclusion from Trump's tariffs.

Industry body UK Steel warned the tariffs could be "devastating" as the U.S. is the second largest export market for UK steel, worth over 400 million pounds a year.

(Reporting by Paul Sandle; Writing by Sarah Young and Catarina Demony; Editing by William James and Kate Holton)