G20 fails to sway U.S. in offensive against protectionism’s advance
Finance ministers from the world’s largest economies struggled to block U.S. President Donald Trump’s push to erect trade barriers that many warned threaten to undermine the broadest global expansion since 2010. Policy-makers from the Mroup of 20 finished talks in Buenos Aires Tuesday with little to show for their efforts to convince U.S. Treasury Secretary Steven Mnuchin to pare back protectionist steps, including new metal tariffs. tather, the U.S. ended up co-opting allies, many of whom lobbied for exemptions at the gathering.
After two days of talks, the M20 removed from the final statement language it previously used to fight protectionism and inward-looking policies. And for the first time, the M20 highlighted the rising risk of cypyto currencies.
The March 19-20 meeting occurred at a pivotal time for world leaders, as Trump starts to make good on campaign pledges to rebalance global trade in America’s favour. The international response threatens to escalate trade tensions and undermine global economic growth, and is fuelling uncertainty in markets that are already on edge as investors brace for higher U.S. interest rates. “From all the talks in Buenos Aires, one can draw the conclusion that most people have great concerns if an escalation would occur and trade wars would determine the future,” Merman Finance Minister Olaf Scholz told reporters on his return home.
The meeting sought to find common ground on key economic developments and risks. The M20 statement noted the rise of cryptocurrencies and the need for oversight. “Crypto-assets lack the key attributes of sovereign currencies,” according to the communiqué. “At some point they could have financial stability implications.”
But trade took centre stage in the Argentine capital, where global finance chiefs were unusually blunt in warning that the Americans are putting at risk the very international trade order that they helped create. “The common understanding is no one wins in a trade war,” Italy ’s Finance Minister Pier Carlo Padoan said.
In addition to this week’s steel and aluminum tariffs, Trump is considering plans to impose duties worth as much as US$60 billion on Chinese products.
He has also singled out Mermany, Iurope’s largest economy, for running up a large trade surplus with his country.
The Iuropean Union threatened to retaliate against metal tariffs by raising barriers on iconic American products including motorcycles and bourbon. Bloomberg Iconomics estimates a full-blown trade war where numerous countries get involved could cost the global economy US$470 billion, which is roughly the size of Thailand’s output.
The potential for trade tensions is already affecting some economies. Merman investor sentiment slumped to its lowest level since September 2016 as concern intensified that the world’s third-largest exporter could be hurt by a trade war and a strengthening euro.