With Trump refusing to back down and slapping Section 232 tariffs on steel and aluminum imports from the EU, Canada and Mexico, which were enacted at midnight on June 1, the G-7 meeting taking place in Whistler, also known as Canada’s Davos, ended up being one big “bash America” show, with French finance minister Bruno Le Maire saying that “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” pointing at the US, which on Friday he said was “alone against everyone and running the risk of economic destabilization.”
Seemingly unable to grasp that Trump would dare break with decades of politically correct tradition and turn his back on allies who continue to impose tariffs on US exports yet balk when the US retaliates in kind, Le Maire said on Saturday that Washington has just a few days to take urgent measures if it wants to avoid unleashing a full-scale trade war with its European allies.
“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 US, and to avoid a trade war among G7 members,” Le Maire told journalists after the conclusion of the G-7 meeting, according to Reuters.
He added that it is up to the US to make the first move:
“The ball is in the camp of the United States, it is up to the American administration to take the right decisions to smooth the situation and to alleviate the difficulties.”
On Friday, Le Maire echoed a statement made first by president Macron, saying “we won’t negotiate under pressure. We will never accept to negotiate under pressure,” adding that the EU should be granted an exemption to the metal tariffs.
Other top officials of the world’s leading economies joined the French minister in his call for urgent actions. In the “chair’s summary” of the meeting, Canadian Finance Minister Bill Morneau said “the international community is faced with significant economic and security issues, which are best addressed through a united front from G-7 countries” adding that “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.”
Meanwhile, German Finance Minister Olaf Scholz said the U.S. levies on imported metals from the European Union, Mexico and Canada are probably illegal: “The decision by the U.S. government to unilaterally implement tariffs is wrong, and – from my point of view – also illegal,’’ Scholz told reporters. “We have clear rules, which are determined at the international level, and this is a breach of those rules.”
Without naming the US, the summary statement of the ministerial meeting criticized the US, saying that “collaborative partnerships to promote free, fair, predictable and mutually beneficial trade” should be restored.
The ministers of the G7 countries also urged the US Treasury Secretary Steven Mnuchin convey their “unanimous concern and disappointment” over the recent US decisions to impose tariffs on metals imports from the EU as well as from Canada and Mexico.
“Ministers and Governors agreed that this discussion should continue at the Leaders’ Summit in Charlevoix, where decisive action is needed. The aim of this should be to restore collaborative partnerships to promote free, fair, predictable and mutually beneficial trade,” the group said in a summary statement written by Canada.
The ministers also “requested that the United States Secretary of the Treasury communicate their unanimous concern and disappointment,” according to the statement.
As Bloomberg adds, Morneau’s summary came after an acrimonious three days of talks – with Treasury Secretary Steven Mnuchin on the receiving end of much of the frustration – in which America’s allies raged against Trump’s decision to proceed with the steel and aluminum tariffs, after previously granting temporary exemptions. Japan had already been subject to the tariffs, which the U.S. said were necessary to protect its national security.
Japanese Finance Minister Taro Aso even 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 after the second day of G-7 finance minister meetings in Whistler, British Columbia. “I felt sorry for him, but I guess it’s not the sort of issue I should sympathize with.”
Aso then added that Mnuchin deflected some of the criticism, urging his counterparts to talk to Trump.
“He was in a tough spot, tough, tough,” the Japanese minister said. “In all honesty, this issue, I can’t do anything about it, you have to say it directly to Trump otherwise nothing will change.”
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However, if the G-7 minus one, or as the French now call it, G-6 hoped to make a favorable impression on Trump, they failed: shortly before the 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.
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!
— Donald J. Trump (@realDonaldTrump) June 2, 2018
And while the frictions at the just concluded G-7 summit were to be expected, there was little drama with Mnuchin doing everything in his power to calm his G-6+1 peers, as the following BBG soundbites reveal:
- MNUCHIN: WE BELIEVE IN THE G-7; MANY AREAS THAT WE AGREE ON
- MNUCHIN: CLEARLY A CONSENSUS FROM OTHER G-7 MINISTERS
- MNUCHIN: WON’T COMMENT ON WHETHER THERE WILL BE EXEMPTIONS
- MNUCHIN: NOT GOING TO SPECULATE ON WHAT WILL HAPPEN AT G-7
- MNUCHIN: U.S. NOT ABANDONING ROLE AS LEADER OF WORLD ECONOMY
- MNUCHIN: OUR OBJECTIVE IS TO ENSURE WE HAVE FAIR/BALANCED TRADE
- MNUCHIN: TRUMP HAS BEEN CLEAR IN WANTING TO ADDRESS TRADE ISSUE
- MNUCHIN: TRADE WAS ONE OF MAIN AREAS OF FOCUS AT G-7 MEETING
- MNUCHIN: SPOKE TO TRUMP TO REFLECT G-7 MEETING CONCERNS
Expect far more fireworks at next week’s G-7 leaders’ summit in Quebec, one which Trump will attend.