Group of Seven finance chiefs issued a rare rebuke of a member nation, claiming U.S. trade actions could undermine global economic confidence and threaten the effectiveness of the Western alliance.
The statement singled out the Americans, the largest and most important member of the G-7, saying “decisive action” is needed at a leaders summit next week in Quebec. The ministers requested that Treasury Secretary Steven Mnuchin “communicate their unanimous concern and disappointment.”
“The international community is faced with significant economic and security issues, which are best addressed through a united front from G-7 countries,” Canadian Finance Minister Bill Morneau said in a “chair’s summary” of the meeting in Whistler, British Columbia. “Members continue to make progress on behalf of our citizens, but recognize that this collaboration and cooperation has been put at risk by trade actions against other members.”
Morneau’s comments came after an acrimonious three days of talks — with Mnuchin on the receiving end of much of the frustration — in which America’s allies protested against President Donald Trump’s decision to impose tariffs on steel and aluminum from the European Union, Canada and Mexico. With the trade dispute triggering one of the biggest crises in the G-7 since the group’s formation in the 1970s, frictions are poised to spill over into next week’s meetings in Charlevoix, Quebec that Trump will attend. The group includes Canada, France, Italy, Germany, the U.K., Japan and the U.S.
G6+1
“It has been a tense and tough G-7. I would say it has been far more a G-6 plus one than a G-7,” said French Finance Minister Bruno Le Maire. The EU has threatened to retaliate with duties on everything from American motorcycles to bourbon.
Before these week’s trade actions, the European Union and Canada had previously been granted temporary exemptions. Japan had already been subject to the tariffs, which the U.S. said were necessary to protect its national security.
At his closing press conference, Mnuchin said that he’s already conveyed the G-7 message to Trump, who he said “has been very clear in wanting to address trade issues.”
“Our objective is to make sure we have fair and balanced trade,” Mnuchin said in the Canadian ski resort town. “I don’t think in any way the U.S. is abandoning its leadership in the global economy. Quite the contrary, we’ve had a massive effort in tax reform in the United States which has had an incredible impact on the U.S. economy.”
U.S. Court
Le Maire opened the door to negotiations over the tariffs, but said the ball is in the U.S. court. “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.,” Le Maire said, adding the EU doesn’t want a trade war.
Mnuchin reiterated that the U.S. will continue to have discussions around possible exemptions to the metal tariffs.
Shortly before the G-7 meeting ended, Trump tweeted that “the United States must, at long last, be treated fairly on trade.”
“If we charge a country ZERO to sell their goods, and they charge us 25, 50 or even 100 percent to sell ours, it is UNFAIR and can no longer be tolerated. That is not Free or Fair Trade, it is Stupid Trade!” the president said, without specifying what tariff rates he was referring to.
Feel-Good Summit
The trade disputes hijacked what was supposed to be a feel-good summit that global finance chiefs initially saw as an opportunity to tout the successes of the global economic upswing. The IMF projects the world economy will grow this year and next at its fastest pace since 2011 and Morneau’s statement did give a nod to the expansion.
Ministers “agreed that the global economy has strengthened since they met last year in Bari and that the expansion is set to persist,” said Morneau, while cautioning the trade dispute is introducing unnecessary risks.
“Concerns were expressed that the tariffs imposed by the United States on its friends and allies, on the grounds of national security, undermine open trade and confidence in the global economy,” it said.
Mnuchin faced so much criticism from his counterparts over the new trade levies that Japanese Finance Minister Taro Aso said he almost “felt sorry” for the U.S. finance chief.
“He’s not directly in charge of the metal tariffs, so in that sense it was very tough for him,” Aso told reporters. “I felt sorry for him, but I guess it’s not the sort of issue I should sympathize with.”
Despite the divisions at the meeting, the U.S. remains a backer of the alliance of wealthy nations, Mnuchin said.
“We believe in the G-7,” he said. “These are our most important allies. We’ve had long-standing relationships will all these countries.” — Bloomberg