G7 ministers hope rebuke spurs repeal of Trump's tariffs
Morneau says it's impossible to talk global risk without discussing U.S. tariffs: sources
G7 finance ministers asked their U.S. counterpart to take a message of disbelief, disappointment and worry back to Washington in the faint hope that it might convince U.S. President Donald Trump to drop his steel and aluminum tariffs.
But they got their answer before Treasury Secretary Steven Mnuchin even left Whistler, B.C., when the president engaged in yet another round of twitter trade diplomacy on Saturday.
"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 on Twitter.
A few hours later, another tweet appeared that marked the latest shots in a continental and transatlantic trade war.
"When you're almost 800 Billion Dollars a year down on Trade, you can't lose a Trade War!" Trump tweeted. "The U.S. has been ripped off by other countries for years on Trade, time to get smart!"
When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War! The U.S. has been ripped off by other countries for years on Trade, time to get smart!—@realDonaldTrump
The tweets only amplified the bizarre nature of a G7 meeting where Mnuchin had to explain to his NATO, NORAD and NAFTA partners why their imports posed a threat to American national security.
France's Minister of the Economy Bruno Le Maire described the dynamic of this G7 as the "G6 plus one" — a sentiment that was only reinforced by the meeting's closing statement that rebuked the United States for its protectionism.
"Members continue to make progress on behalf of our citizens," said the statement released by Canadian Finance Minister Bill Morneau. "This collaboration and co-operation has been put at risk by trade actions against other members."
The looming trade war overshadowed the progress the finance ministers made on global financial stability, inclusive growth and international development.
United front against tariffs
But the optimistic take from one senior Canadian official is that it was actually a good thing that the tariff bomb was dropped as the finance ministers and central bankers met.
It allowed for a united front — as the exclusive group of advanced economies delivered a blunt message to Mnuchin.
Morneau started that conversation during a private discussion on global risk, according to two sources who were in the room. Morneau made the point that it was impossible to have a conversation on global risks without discussing the risk posed by the U.S. tariffs.
Philip Hammond — the United Kingdom's chancellor of the exchequer — expressed frustration that the U.S. went relatively easy on China while attacking economic and military allies with punishing tariffs.
China — a senior Canadian official says — was frequently referenced in the private talks by various central bankers and by Christine Lagarde, the managing director of the International Monetary Fund. The champions of a rules-based trading system argued it would be hard to push against China's trade actions when the U.S. was acting like this.
'Fair and balanced trade'
Morneau later said publicly that they tried to make reasonable and fact-based arguments. Mnuchin didn't flinch.
"President Trump has been very clear in wanting to address trade issues," Mnuchin told reporters. "Our objective is to make sure we have fair and balanced trade and that's what we're really focused on."
Fair and balanced clearly mean different things to the United States than to the rest of the countries around the table. That disagreement is at the core of a race to a trade war that will raise prices for consumers and could destroy jobs on both sides of the Canada-U.S. border and the Atlantic Ocean.
Canadian officials hope Whistler is the first jab in a one-two punch of meetings — and that the united front expressed at the finance ministers' table will be carried into the leaders' summit next week in Quebec.
Canada has already outlined billions of dollars in surgically targeted retaliatory tariffs designed to inflict economic harm in the backyards of top U.S. political figures.
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Europe is preparing similar actions — with France's Le Maire emerging from the private talks to say retaliation was coming if Trump didn't reconsider his tariffs within hours or days.
It sets the stage for a tense gathering of G7 leaders in Quebec's picturesque Charlevoix region when Trump will make his first official visit to Canada, riding a storm of tweets of tariffs.
The other members of the G7 can only hope that facts and reasonableness will prevail, so the meeting can evolve into a peace summit to stop a trade war.