TARIFF RIFT
G7 summit in Quebec could see showdown between Trump and allies over trade.
U.S. President Donald Trump is headed for a showdown with America’s allies at a Group of Seven summit this week in Quebec, with the European Union and Canada threatening retaliatory measures unless he reverses course on steel and aluminum levies.
China, while open to talks to resolve the dispute, is warning it will withdraw commitments it made on trade if the president carries out a separate threat to impose tariffs on the Asian country. While China doesn’t want an escalation in trade tensions, it will defend its core interests, according to a commentary published Monday by the state-run Economic Daily.
Trump changes his mind often enough that U.S. allies and rivals alike hope he’ll do just that on tariffs in the next few days. An all-out trade war may become unavoidable if he doesn’t.
“We still have a few days to avoid an escalation. We still have a few days to take the necessary steps to avoid a trade war between the EU and the U.S.,” French Finance Minister Bruno Le Maire said after a meeting of G7 finance ministers and central bank governors in Whistler, B.C.
The White House appeared unfazed by threats from allies. Top economic adviser Larry Kudlow said the blame for any escalation lies with the U.S.’s trading partners. Trump doubled down on that message Monday morning, tweeting that China and Canada have unacceptable barriers against agricultural imports. “The U.S. has made such bad trade deals over so many years that we can only WIN,” Trump tweeted.
Investors in Asia appeared little rattled by the talk of war, with stock markets in Japan, China, Australia and South Korea all up in trading on Monday.
The metal tariffs imposed on the EU and Canada are the latest escalation by the U.S. on the trade front that has roiled financial markets for months and prompted the Internation- al Monetary Fund to warn of a trade war that could undermine the broadest global upswing in years. Finance chiefs from the wealthy nations emerged from three days of talks on Saturday “unanimous” in their condemnation of Trump’s decision to impose tariffs on steel and aluminum, promising to press ahead with retaliatory measures unless Trump steps back.
It was a rare rebuke of a member nation by the group that foreshadows high drama when Trump meets leaders of the other six major industrialized nations Friday at a summit in the Quebec resort town of Charlevoix, near the border with Maine.
While both the U.S. and China reported progress in discussions this weekend about how to reduce China’s $375-billion (U.S.) goods-trade surplus with the U.S., Trump’s revival last week of a plan to slap tariffs on $50 billion of Chinese imports has cast talks into turmoil.
“If the U.S. rolls out trade measures including tariffs, all the agreements reached in the negotiations won’t take effect,” state-run Xinhua News Agency reported Sunday, citing a statement from the Chinese team that met with a U.S. delegation led by Commerce Secretary Wilbur Ross.
France’s Le Maire opened the door to negotiations over U.S. tariffs, but said the ball is in Trump’s court. “We want to avoid a trade war,” he said. “But everything is ready.”
The warning came after an acrimonious three days of talks — with U.S. Treasury Secretary Steven Mnuchin on the receiving end of much of the frustration — in which America’s allies protested against Trump’s decision to impose tariffs on steel and aluminum from the EU, Canada and Mexico.