Recasts with details from Carney's press conference

By Promit Mukherjee

OTTAWA, June 19 (Reuters) - Canada could increase counter-tariffs on U.S.-produced steel and aluminum if it does not reach a broader trade deal with President Donald Trump within 30 days, Prime Minister Mark Carney said on Thursday.

Trump increased import duties on steel and aluminum to 50% from 25% earlier this month, prompting industry calls for an official response. Trump's move could hurt Canada, which is the largest seller of the metals to the U.S.

Carney said on Monday he had agreed with Trump that the two nations should try to wrap up a new economic and security deal by July 21.

"Canada will adjust its existing counter-tariffs on U.S. steel and aluminum products on July 21 to levels consistent with progress made in the broader trading agreement with the United States," Carney told a press conference.

Carney refrained from immediately matching Trump's June tariff hike, saying he wanted to see progress on talks to create a new economic and security relationship.

On March 13, Canada imposed 25% retaliatory tariffs on a list of steel products worth C$12.6 billion and aluminum products worth C$3 billion.

As part of Thursday's announcement, Canada will implement new procurement rules, under which Canadian producers and trading partners who have tariff-free reciprocal access can compete for federal procurements of steel and aluminum.

Carney said Canada would establish new tariff-rate quotas of 100% of 2024 levels on imports of steel products from non-free trade agreement partners "to stabilize the domestic market and prevent harmful trade diversion."

Canada ships over 90% of its total steel and aluminum exports to the U.S. and consumes about a fifth of U.S. exports of steel and 50% of its aluminum exports, according to the Royal Bank of Canada, highlighting the critical metals trade between the two countries.

Under Carney, Canada has also lined up an array of projects to build infrastructure, starting from defense, oil and gas pipelines to doubling housing capacity all of which will require tons of steel and aluminum.

"We are united in working on all forms of support for the industry... that starts with buying Canadian steel and aluminum for federal projects," Carney said while addressing questions from the media.

As part of the new measures the government will also favor the use of Canadian steel and aluminum in Canadian-made products and will create a task force to monitor how the steel and aluminum markets are evolving under the tariff regime.

(Reporting by Promit Mukherjee; Editing by Rod Nickel, David Ljunggren and Andrea Ricci)

((david.ljunggren@tr.com; +1 647 480 7891;))