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WRAPUP 2-China, Japan, South Korea bristle over U.S. steel, aluminium tariffs

By Aaron Sheldrick

TOKYO March 9 (Reuters) - Major Asian nations reacted
sharply to U.S. President Donald Trump's decision to impose
tariffs on steel and aluminium imports on Friday, warning of
damage to relations amid industry calls for retaliation.

Japan said the move would have a "big impact" on the
countries' close bilateral ties, while China said it was
"resolutely opposed" to the decision and South Korea said it may
file a complaint to the World Trade Organization.

Trump on Thursday pressed ahead with the imposition of 25
percent tariffs on steel imports and 10 percent for aluminium on
Thursday, though he announced exemptions for Canada and Mexico,
and said exceptions could also be made for other allies.

China, which produces half the world's steel, will assess
any damage caused by the U.S. move and "firmly defend its
legitimate rights and interests," the country's Ministry of
Commerce said.

The tariffs would "seriously impact the normal order of
international trade," the ministry said.

Trade tensions between China and United States have risen
since Trump took office. China accounts for only a small
fraction of U.S. steel imports, but its massive industrial
expansion has helped create a global glut of steel that has
driven down prices.

China's steel and metals associations urged the government
to retaliate against the United States, citing imports ranging
from stainless steel to coal, agricultural products and

It was the most explicit threat yet from the country in an
escalating trade spat.

The dispute has fuelled concerns that soybeans, the United
States' most valuable export to the world's second largest
economy, might be caught up in the trade actions after Beijing
launched a probe into imports of U.S. sorghum, a grain used in
animal feed and liquor.

"The cost of a trade war will be tremendous and it will make
everyone unhappy," Junichi Makino, chief economist at SMBC Nikko
Securities in Tokyo, said in a report on Friday.

Trump's declaration coincided with the signing by 11
countries of a new Trans-Pacific trade pact that the United
States withdrew from last year.

Japan, South Korea said they would seek exceptions, as did

Prime Minister Malcolm Turnbull sounded confident of getting
favourable treatment as Trump spoke of Washington's strong
relationship with Australia, a major exporter of iron ore but
exports little steel and the United States was not a major

"I was pleased to see the president acknowledge the strong
points I have been making to him. There is no case for imposing
tariffs on Australian steel," Turnbull told reporters in Sydney.

The European Union, Brazil and Argentina said overnight they
should not be targeted or would seek exemptions.

"Higher tariffs will increase costs for Hyundai and Kia
putting them at a disadvantage compared with their rivals in the
United States," a senior South Korean trade ministry official
told reporters in a background briefing, referring to Hyundai
Motor and Kia Motors.

The South Korean official said the tariffs would impact the
renegotiation of the bilateral free trade deal with the United
States that is currently underway.

South Korea's trade minister told local steel makers that
nations should try to avoid a trade war.

Shares in China's steel and aluminium makers fell on Friday
morning. Baoshan Iron & Steel was down 3.5 percent
by 0014 GMT, while Hesteel and Beijing Shougang
were down more than 1 percent.

In South Korea, shares in Posco were down more
than 3 percent, while in Tokyo Japan's biggest steelmaker Nippon
Steel & Sumitomo Metal was down slightly.

Chinese steel futures slumped to their weakest level since

(Reporting by Adam Jourdan and Wang Jing in SHANGHAI, Yuka
Obayashi, Kaori Kaneko and Ami Miyazaki in TOKYO, Ju-Min Park
and Hyunjoo Jin in SEOUL; writing by Aaron Sheldrick; editing by
Simon Cameron-Moore)

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