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G7

G7

US must de-escalate tariff tensions in next few days to avoid trade war, France warns

PUBLISHED : Sunday, 03 June, 2018, 3:59am
UPDATED : Tuesday, 26 June, 2018, 3:57am

Finance leaders of the closest US allies vented anger over the Trump administration’s metal import tariffs but ended a three-day meeting in Canada on Saturday with no solutions, setting the stage for a heated fight at the G7 summit next week in Quebec.

US Treasury Secretary Steven Mnuchin failed to soothe the frustrations of his Group of Seven (G7) counterparts over the 25 per cent steel and 10 per cent aluminium tariffs that Washington imposed on Mexico, Canada and the European Union this week.

“Finance Ministers and Central Bank Governors requested that the United States Secretary of the Treasury communicate their unanimous concern and disappointment,” the group said in a summary statement written by Canada.

“Ministers and Governors agreed that this discussion should continue at the Leaders’ Summit in Charlevoix (Quebec), where decisive action is needed,” the statement said.

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All six of the other G7 countries are now paying the tariffs, which are largely aimed at curbing excess production in China. The topic dominated discussions at the finance meeting in the Canadian mountain resort of Whistler, British Columbia.

French Finance Minister Bruno Le Maire warn the United States has only a few days to avoid sparking a trade war with its allies and it is up to the United States to make a move to defuse tensions over tariffs.

“The next week will depend on the decision the administration is ready to take in the next few days and in the next few hours – I’m not talking about weeks ahead,” he said. “I want to make it clear … that it is up to the US administration to make the right decisions to alleviate the situation and ease the difficulties.”

Speaking after the meeting, Le Maire said the EU was poised to take counter-measures against the US.

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“Everyone expressed their complete incomprehension of the American decisions and everyone said it was up to the Americans to take the next step since they were the ones who imposed the tariffs,” Le Maire told reporters.

The meeting of top economic policymakers was seen as a prelude to the trade disputes that will dominate the two-day G7 summit that begins on Friday in Quebec.

Chairing a meeting on Friday, Morneau allowed participants to register grievances with Mnuchin one at a time, according to a Canadian source.

“On trade, over the course of the last couple of days there was an important difference of opinion,” Canadian Finance Minister Bill Morneau told reporters after hosting a meeting with his G7 counterparts in the mountain resort town of Whistler, British Columbia.

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“The Americans have decided, in our mind, to take actions that’s not at all constructive, it’s actually destructive to our ability to get things done around tariffs on steel and aluminium,” he said after the meeting ended.

Behind closed doors, Mnuchin listened but spoke little, saying instead the discussion could continue at next week’s G7 summit in Quebec, Canada at which Trump is expected to participate, according to several sources briefed on the talks.

Mnuchin said he had informed Trump of his discussions but that trade was only one of many issues on a full agenda.

“These are our most important allies or some of our most important allies. We’ve had long-standing relationships with all these countries that are very important across all different aspects,” Mnuchin told reporters.

“I believe there was a comment out there that this was the G6 plus one. It was not. This was the G7. We believe in the G7.”

G7 governments were also digesting Trump’s threats to impose tariffs on hundreds of billions of dollars in US auto imports on purported national security grounds.

Mnuchin is regarded as one of the more moderate voices on trade in the Trump administration,

The US steel and aluminium tariffs were imposed early on Friday after Canada, Mexico and the EU refused to accept quotas in negotiations with US Commerce Secretary Wilbur Ross. Japanese metal producers have been paying the tariffs since March 23.

Officials at the G7 meeting said the tariffs made it more difficult for the group to work together to confront China’s trade practises, especially when Beijing, like most G7 members, supports the current World Trade Organisation-based trade rules and the United States is seeking to go around them.