* Japan needs to be cautious over country exemption - Shindo
* U.S. won stronger card over trade pact talks with S. Korea
* Japan steelmakers to seek product exemption from U.S. tariffs (Adds quotes and details)
TOKYO, March 26 (Reuters) - Japan's steel industry is worried the United States is using new tariffs on steel and aluminium as a tactic to win better deals in wider trade pacts, the head of the national steel lobby said on Monday, calling for Japan to be cautious on further talks.
The United States on Monday agreed to exempt South Korea from steel tariffs, instead imposing a quota on steel imports as the two countries agreed in principle to revise a trade pact sharply criticised by U.S. President Donald Trump.
Last week, Trump temporarily excluded six countries, including Canada and Mexico, and European Union states from higher U.S. import duties on steel and aluminum which took effect on Friday. The exclusion included most U.S. allies, but not Japan.
"We are concerned that the new tariffs are being used by the U.S. as a card for wider trade negotiation deals," Japan Iron and Steel Federation Chairman Kosei Shindo told a news conference in the Japanese capital.
He said the U.S. apparently won more sway in its bilateral and broader trade negotiations with South Korea by offering an exemption to the Asian country's products from the new tariffs.
"Japan will need to take a cautious stance when talking with the U.S. about country exemption as the discussion could develop to wider trade issues, such as other industrial products...and even agriculture products," Shindo said.
"For now, what Japanese steelmakers should do is to seek product exemption," he said. The official said there were no quickly available substitutes to many of the Japanese products that are exported to the U.S. market.
Shindo, also the president of Nippon Steel & Sumitomo Metal Corp, Japan's largest steelmaker, said his company is working with its U.S. customers to have some of their products exempted from the new tariffs.
"There have been no cases of cancellation so far by our U.S. customers for our products due to the new tariffs," he said. (Reporting by Yuka Obayashi; editing by Richard Pullin and Kenneth Maxwell)