France rejects US trade overtures

• At G-20 finance ministers’ meeting, France rejects Washington’s offer of free trade and says it cannot negotiate with a gun to its head

The US is seeking to woo Europe and Japan with free trade deals to gain leverage in an escalating tariff war with China, but its overtures faced stiff resistance from France at a G-20 finance ministers meeting dominated by trade tensions.

The US sought to woo Europe and Japan with free trade deals on Saturday to gain leverage in an escalating tariff war with China but its overtures faced stiff resistance from France at a Group of 20 (G-20) finance ministers meeting dominated by trade tension.

US Treasury Secretary Steven Mnuchin told reporters at the gathering of the financial leaders of the world’s 20 largest economies in Buenos Aires that he was renewing President Donald Trump’s proposal that Group of Seven allies drop trade barriers between them.

“If Europe believes in free trade, we’re ready to sign a free trade agreement,” Mnuchin said, adding that such a deal would require the elimination of tariffs, nontariff barriers and subsidies. “It has to be all three issues.”

Trump has angered European allies by imposing import tariffs of 25% on steel and 10% on aluminium, causing the EU to retaliate with similar amounts of tariffs on products such as Harley-Davidson motorcycles.

Trump, who frequently criticises Europe’s 10% car tariffs, is also studying the addition of a 25% levy on automotive imports, which would hit Europe and Japan hard.

French Finance Minister Bruno Le Maire said the EU would not consider launching trade talks with the US unless Trump first withdraws steel and aluminium tariffs and stands down on the car tariff threat.

“We refuse to negotiate with a gun to our head,” he said.

Mnuchin’s offer to the EU and Japan — along with a renewed effort to jump-start stalled talks with Mexico and Canada to modernise the North American Free Trade Agreement — come as the US and China are in an escalating trade dispute with no talks in sight.

The world’s two largest economies have slapped tariffs on $34bn worth of each other’s goods so far. Trump on Friday threatened tariffs on all $500bn of Chinese exports to the US unless Beijing agrees to major structural changes to its technology transfer, industrial subsidy and joint venture policies.

Mnuchin is not meeting formally with Chinese officials at the G-20 meeting but said that was because his normal counterpart, top Chinese economic adviser Liu He, is not attending.

The IMF warned the recent wave of trade tariffs would significantly harm global growth.

IMF MD Christine Lagarde presented the G-20 finance ministers and central bank governors with a report warning that existing trade restrictions would reduce global output by 0.5%. In the briefing note prepared for G-20 ministers, the IMF said global economic growth may peak at 3.9% in 2018 and 2019, while downside risks have increased.

Lagarde’s presentation came after Mnuchin said there had been no “macro” effect yet on the US.

He said that while there were some “micro” effects, such as retaliation against US-produced soya beans, lobsters and bourbon, he did not believe that tariffs would keep the US from sustained 3% growth this year.

“I still think from a macro basis we do not see any impact on what’s very positive growth,” Mnuchin said.