President Donald Trump is headed for a showdown with America’s allies at a Group of Seven summit this week in Quebec, with the European Union and Canada threatening retaliatory measures unless he reverses course on new steel and aluminum levies.
China, meanwhile, is warning it will withdraw commitments it made on trade if the president carries out a separate threat to impose tariffs on the Asian country. While China doesn’t want an escalation in trade tensions, it has the confidence, competence and experience to defend its core interests, according to a commentary published Monday by state-run Economic Daily.
Trump changes his mind often enough that U.S. allies and rivals alike hope he’ll do just that on tariffs in the next few days. An all-out trade war may become unavoidable if he doesn’t.
“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.,” French Finance Minister Bruno Le Maire said after a meeting of G-7 finance ministers and central bank governors in Whistler, British Columbia.
The White House appeared unfazed by threats from allies. Top economic adviser Larry Kudlow said Canadian Prime Minister Justin Trudeau was “overreacting” in response to the tariffs, and said the blame for any escalation lies with the U.S.’s trading partners. He said Trump is simply responding to decades of trade abuse.
“Don’t blame Trump,” Kudlow said on “Fox News Sunday.” “Blame China, blame Europe, blame NAFTA, blame those who don’t want reciprocal trading, tariff rates and protectionism.”
The metal tariffs imposed on the European Union and Canada are the latest escalation by the U.S. on the trade front that has roiled financial markets for months and prompted the International Monetary Fund to warn of a trade war that could undermine the broadest global upswing in years.
Unanimous Condemnation
Finance chiefs from the group of wealthy nations emerged from three days of talks on Saturday “unanimous” in their condemnation of Trump’s decision to impose tariffs on steel and aluminum, promising to press ahead with retaliatory measures unless Trump steps back.
It was a rare rebuke of a member nation by the group that foreshadows high drama when Trump meets leaders of the other six major industrialized nations Friday at a summit in the Quebec resort town of Charlevoix, near the border with Maine.
Stupid Trade
Trump, for his part, spent time during his weekend retreat at Camp David tweeting that “stupid trade” could “no longer be tolerated. The president said the tariffs being charged against other countries would help to fund the U.S. government, and repeated his refrain that the U.S. could not lose a trade war in a international climate where the rules were already stacked against American business. He specifically noted the size of the trade deficit with China as he defended his moves.