United States President Donald Trump has confirmed he and Australian Prime Minister Malcolm Turnbull are working on an agreement to provide Australia an exemption from steel or aluminium tariffs.

Trump took to Twitter on Saturday morning to laud 'great Australia' and say he'd spoken with Turnbull.

"Working very quickly on a security agreement so we don't have to impose steel or aluminium tariffs on our ally, the great nation of Australia!" he tweeted.

In response, the Prime Minister also tweeted about the conversation, writing: "Great discussion today on security and trade. Australia/US trade is fair & reciprocal & each of our nations has no closer ally.

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"Thank you for confirming new tariffs won't have to be imposed on Australian steel & aluminium - good for jobs in Australia and in US!"

The news comes after Trump yesterday used his executive powers to apply tariffs of 25 per cent on steel and 10 per cent to aluminium but said there would be a 15 day window for nations to make an appeal for exemptions.

He mentioned both Canada and Mexico - US partners in the Nafta trade pact - and Australia, as a valuable ally that would be considered for exemptions.

There was no mention of New Zealand, which exports around $60 million of steel and aluminium to the US each year.

Trump's decision has evoked fears of a trade war.

Stephen Jacobi, executive director, NZ International Business Forum told the Herald: "This is the worst way to conduct trade policy, it flouts WTO rules. It's not way to put the world on a path to growth."

Jacobi said he hoped that progress could be made in the next 15 days to soften the measures further and that any response from trading partners was handled through the WTO.

"There are lots of forces in the US who will rally around this, there are already congressional efforts to overturn this, there's a big group of industries that have come together to advocate for something," Jacobi said.

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But New Zealand's Government would have little option but "to attempt to negotiate something" with a view to being included in exemptions.

- Additional reporting Liam Dann, AAP