The Group of Seven recently held a meeting in Canada, with finance ministers and central bank heads attending from seven leading countries. In this meeting, every country opposed the strengthening of U.S. protectionist trade policies, such as the tariffs it placed on metal imports. In order to relay Japan, Europe, and Canada’s fear and disappointment to President Trump, the chairman concluded the meeting with a summary that included a request of the U.S. Calling out a single country like this is unprecedented.
Trump said on Twitter, “When you're almost 800 Billion Dollars a year down on Trade, you can't lose a Trade War!” showing that he’s unwilling to let down his firm stance. The G-7 Summit, which will be held in eight days, seems like it won’t be able to avoid trouble.*
In his obsession to reduce the trade deficit, Trump is behaving so selfishly he is even willing to violate international rules. Just how far will his egotism go? Even if he’s doing this for the upcoming November midterm elections, there isn’t much hope that he’ll soften his whole “America #1” tone after the elections.
In March, the U.S. placed metal tariffs on China and Japan and deferred them for Canada and the European Union in order to conduct further negotiations. However, on the first day of this month, right during the finance ministers' meeting, the U.S. cancelled this deferral, escalating its antagonism toward the United Kingdom, France, Germany, Italy, and Canada.
The topic of this meeting is, at its core, the world economy and trends in foreign exchange. Despite this, the sheer number of trade-related remarks signals a serious problem. United States Secretary of the Treasury Mnuchin, who also attended the meeting, denied in a press conference afterward that there is a crack in the G-7. Yet it’s impossible to hide that it was one versus six.
The world economy is steady at the moment, but the outflow of funds from emerging powers has accelerated due to the recent rise of the United States’ long-term interest rate, leading some countries to suffer from sharp currency depreciation. The tension surrounding the Iran nuclear deal is growing in the Middle East, and Italy’s political situation is shaky with its weak financial situation. Both are also grounds for concern.
It’s a shame the chairman’s summary didn’t include a joint declaration, and only tried to reinforce the unity of the G-7 despite the difference in their viewpoints. Prolonging this conflict might spur unease in the financial system and marketplace, which begs the question of whether the countries can fulfill their duties and come together to control the situation.
The EU and Canada are preparing retaliatory tariffs and other antagonistic measures against the United States. Though the Japanese government has taken a careful stance thus far, Minister of Finance Taro Aso has hinted that it may work together with them to bring their trade complaints to the World Trade Organization.
Following its metal tariffs, the Trump administration is also considering tariffs on imported automobiles, citing security concerns as their reason. It’s exhausting trying to understand why they’re treating their allies this way, too, and I want these seven countries to cooperate and work together at the Summit to correct this trade disparity according to international rules.
*Editor’s note: The 44th G-7 Summit was held June 8-9, 2018