The United States will continue to exempt allied economies, including the European Union, from steel and aluminum tariffs if they make concessions on trade, a senior White House advisor said Thursday.
"It's very important that some of our friends make some concessions with respect to trading practices, tariffs and taxes," National Economic Council Director Larry Kudlow told CNBC.
He pointed to concerns about "equal treatment of automobiles" in the EU as an example.
Kudlow's remarks come four days before the tariff exemptions are due to expire for the EU, Canada, Mexico and others, after which the major exporters would face punishing import duties of 25 percent on steel and 10 percent on aluminum.
President Donald Trump imposed the tariffs last month on national security grounds, saying cheap imports were undermining US producers crucial to military preparedness, but gave a temporary reprieve to the countries that are the main supplies to the US market.
The measures were targeted primarily at overproduction by China, which has been the key focus of Trump's combative trade policies.
But Kudlow said the auto sector, rather than national security, was one area where a deal could be reached on the exemptions.
"One of the issues cropping up is the equal treatment of automobiles. We'd like to see some concessions from Europe," Kudlow said, adding that details were still under consideration.
"We'll let you know as soon as we figure it all out."
If the tariff exemptions expire it could reignite the turmoil seen last month on global markets, which fear a full-blown trade war could hamper growth, harm profits and push prices higher.
The EU had threatened to impose their own punitive tariffs on key US goods if they were not shielded from the steel and aluminum duties.
In a state visit to Washington, French President Emmanuel Macron this week called for cooperation among allies on trade.
"You don't make trade war with your allies," Macron warned addressed the US Congress.
Kudlow is due to travel to China next week -- accompanying Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer -- to discuss Washington's trade disputes with Beijing.
Trump has authorized tariffs on up to $50 billion in Chinese imports in retaliation for the alleged theft of US intellectual property but investors have taken some solace in recent weeks as both countries have sent some conciliatory signals.