* Wall Street pares losses on possible exemptions
* Cohn resignation strengthens U.S. trade hawks
* Opposition to blanket tariffs mounts
By Steve Holland
WASHINGTON, March 7 (Reuters) - U.S. President Donald Trumpplans to offer Canada and Mexico a 30-day exemption from plannedtariffs on steel and aluminum imports, which could be extendedbased on progress in NAFTA talks, a White House official said onWednesday night.
The move, first reported by the Washington Post, followedcomments earlier in the day by a White House spokeswoman thatthe impending tariffs could exclude Canada, Mexico and a clutchof other countries "based on national security."
Trump was expected to sign a presidential proclamation toestablish the tariffs during a ceremony on Thursday, but a WhiteHouse official said later it could slide into Friday becausedocuments had to be cleared through a legal process.
The president has faced mounting opposition to the tariffsfrom prominent congressional Republicans and business officialsworried about their potential impact on the economy.
The tariffs would impose duties of 25 percent on steel and10 percent on aluminium to counter cheap imports, especiallyfrom China, that the president says undermine U.S. industry andjobs.
A senior U.S. official said the measures would take effectabout two weeks after Trump signs the proclamation.
White House spokeswoman Sarah Sanders told a regular mediabriefing on Wednesday: "We expect that the president will signsomething by the end of the week and there are potentialcarve-outs for Mexico and Canada based on national security, andpossibly other countries as well based on that process.
"It will be country by country, and it will be based onnational security," she said.
Trump had said on Monday that Canada and Mexico would onlybe excluded after the successful renegotiation of the NorthAmerican Free Trade Agreement. by Trump and U.S. trade negotiators to link theNAFTA talks to the duties have received short shrift from Ottawaand Mexico City. that does not include exemptions risks retaliatorytariffs on U.S. exports - not least by Canada and Europe - andcomplicates already tough trade talks on NAFTA.
The benchmark Standard & Poor's 500 stock index endedslightly lower following a volatile session after Trump promisedthe tariffs but then said Mexico and Canada could be exempt.
The S&P .SPX closed 0.05 percent lower after being down0.4 percent, while the Dow Jones Industrial Average .DJI endeddown 0.33 percent. The U.S. dollar .DXY pared gains to endlittle changed, while the Canadian dollar CAD= and Mexicanpeso MXN= pared some losses. were rattled by Tuesday's resignation announcementby Trump's chief economic adviser, Gary Cohn, who was seen as abulwark against Trump's economic nationalism.
Cohn's departure, after an internal White House battle overTrump's plans to impose the tariffs, clears the way for greaterinfluence by trade hardliners such as Commerce Secretary WilburRoss and Peter Navarro, Trump's trade policy adviser.
Sanders said Trump was considering several candidates tofill Cohn's position, while Navarro said he was not short-listedfor the job. his first tweet on Wednesday, the Republican presidentshowed no sign of backing away from the tariffs, saying theUnited States had lost more than 55,000 factories and 6 millionmanufacturing jobs and let its trade deficit soar since the1989-1993 administration of President George H.W. Bush.
Later, his tweets turned to trade with China, demanding thatBeijing lay out plans for reducing its trade surplus with theUnited States by $1 billion, which appeared to have been raisedduring a meeting with a top Chinese official last week.
"China has been asked to develop a plan for the year of aOne Billion Dollar reduction in their massive Trade Deficit withthe United States," Trump tweeted, without saying where themessage had been conveyed.
China ran a record goods trade surplus with the UnitedStates last year of $375.2 billion Wednesday, more than 100 House of RepresentativeRepublicans, including Kevin Brady, chairman of the House Waysand Means Committee that oversees U.S. trade policy, wrote toTrump praising him for standing up to "bad actors," butemphasized that fairly traded products should be excluded fromthe tariffs.
In a separate letter, Iowa's congressional delegation,including two Republican senators, warned that the tariffs wouldhurt the state's farmers and manufacturing.
The head of the influential U.S. Chamber of Commerce, TomDonohue, warned about the impact to the economy.
"We won't drive the economy to over 3 percent growth orcontinue to create jobs if we go down this path," said Donohue,the chamber's president and chief executive. "We urge theadministration to take this risk seriously."
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