The prime minister reminded the US it already has "very fair and reciprocal" trade with Australia.
"As they said today, there is no tariffs on US imports into Australia, and it's as fair a trade deal as the US could possibly have," Mr Turnbull told reporters on Friday night.
US Trade Representative Robert Lighthizer and Mr Trump's policy adviser Peter Navarro will closely monitor imports of steel and aluminium from Australia and other exempted countries.
"By May 1, 2018, the President will decide whether to continue to exempt these countries from the tariffs, based on the status of the discussions," the White House said.
Mr Navarro told CNN the exempted nations would be saddled with steel and aluminium quotas to prevent non-exempted nations attempting to find backdoor entry points to America.
"Every country that is not facing tariffs that we are going to negotiate with, will face quotas so that we protect our aluminum and steel industries," he said.
"If you don't put a quota on, then any country that can do whatever they want will become a trans-shipment point for any other country."
He did not specify the likely size of Australia's quota.
Australian Industry Group chief executive Innes Willox said it was "deeply disturbing" to see the volatile behaviour from the US.
"Australian business is increasingly concerned by the uncertainty and potential disruption created by these whimsical policy shifts," he said.
"We want to invest and get on with the job. This approach ... can only really do harm to long-standing arrangements and relationships."
Australia's peak body representing the steel industry says it's too early to tell what the impact will be.
"I don't think until the details come out that we really know what the implications of what he is announcing or is not announcing," Steel Institute chief executive Tony Dixon said.
The announcement came as Mr Trump heightened fears of a US-China trade war by also announcing plans to hit Chinese goods with $US60 billion in tariffs.