Finance

Trump tariffs stir up angst ahead of G7 summit

Foreign diplomats and U.S. officials are looking ahead to this weeks G7 summit with a sense of dread amid growing international tensions with President Donald Trump and little hope of reaching consensus.

With just three days until Trump arrives in Canada for the annual meeting with Americas closest foreign allies, member countries are fuming over the presidents decision to impose steep tariffs on steel and aluminum imports, a move that could have dire economic consequences for every other member of the Group of Seven major industrial nations.

Canada, Japan and key European Union nations have long sought to win over the U.S. president by playing nice on the world stage. But after nearly a year and a half, the G7 countries frustrations are bursting into public view.

Prime Minister Justin Trudeau of Canada, who is hosting the summit, excoriated Trumps recent tariff decision, responding with dollar-for-dollar tariffs of his own and calling the presidents decision “insulting” and “totally unacceptable.”

Japan has grown increasingly concerned that it is being pushed to the side as Trump prepares to meet with North Koreas dictator, Kim Jong Un. And France, whose president, Emmanuel Macron, had worked hard to build rapport with Trump, is reeling from a “terrible” phone call with the American president that went south after Macron bluntly criticized U.S. tariffs.

G7 negotiators remain deeply divided over the joint statement that countries usually release at the end of the annual event.

Trump is expected to get an earful from his foreign counterparts during the meeting, which starts on Friday. U.S. officials acknowledged privately that the gathering could be rife with awkward moments, with one official predicting that it will be a “mess.”

“I think they will be ganging up on him,” said Bill Reinsch, a trade expert at the Center for Strategic and International Studies. “But in addition to the immediate issue of the tariffs, there is an underlying debate that is going to go on … and that is a growing concern that the entire rules-based international system and the institutions that underlie it are increasingly at risk.”

G7 negotiators remain deeply divided over the joint statement that countries usually release at the end of the annual event. The statement is meant to project unity among the worlds biggest economies, detailing a range of policy issues on which they can all agree.

“The G7 traditionally, for 20-plus years, has been a group of like-minded developed countries that sit together and figure out what do we do to address key global problems,” said Robert Fisher, a consultant with Hills & Company and a former U.S. trade official who helped negotiate NAFTA. “Now trade has become, perhaps more than anything, the major dividing line between the G6 and the one. And we are the one.”

Some foreign officials, meanwhile, have begun wondering whether its better for Trump to skip the G7 altogether.

Another U.S. official told POLITICO that he thinks there is no chance the U.S. and the other G7 members could reach common ground on crucial issues like trade and climate change, adding that it is increasingly likely there wont be a joint statement at all at the end of the meeting. Multiple U.S. officials have complained privately that early drafts of the statement were far too liberal, arguing that there was little the administration could latch on to.

Some foreign officials, meanwhile, have begun wondering whether its better for Trump to skip the G7 altogether rather than risk his making a spectacle at the event.

“If the president were not to go, that would be a major snub,” Fisher said. “I would see that as a further escalation in tensions between the U.S. and, normally, our allies.”

Trade is expected to be a central topic of discussion throughout the summit, and G7 leaders will sit down for a session on “economic growth, the future of work and trade” as one of their first meetings, according to a background document released by the Council of the EU, which represents the executive governments of European Union member countries.

A senior EU official sought to moderate expectations that any progress would be made with Trump over the tariffs, saying the potential for progress is “extremely low.”

“We do not expect any breakthrough on the trade dispute with the U.S,” the official told reporters. He added that “the tariffs imposed … last week have significantly increased tensions” between the U.S. and its G7 partners, which are “united” in their ambition to retaliate against the Trump tariffs.

“This is a very rare case where opposition against the United States was unanimous” — Taro Aso, Japanese finance minister

A summit this past weekend among the G7 finance ministers offered a preview of what could be in store for Trump, after leaders faced off over unprecedented divisions on policy and failed to reach consensus on a joint concluding statement.

In a rare show of disunity, a chairs summary written by Canada and released at the close of the event highlighted concerns over “tariffs imposed by the United States on its friends and allies” that “undermine open trade and confidence in the global economy.” The summary said ministers of the six other countries — all of which are now paying tariffs on their steel and aluminum exports to the U.S. — requested that Treasury Secretary Steven Mnuchin, who represented the U.S. at the finance meeting, communicate to Trump their “unanimous concern and disappointment.”

“Ive been to these meetings for a long time,” the Japanese finance minister, Taro Aso, told reporters, according to Reuters. “But this is a very rare case where opposition against the United States was unanimous.”

Trump, for his part, is already looking past the G7, focusing much of his attention on the summit next week with Kim, according to administration officials. The president is scheduled to depart for Singapore, the summit site, from Canada at the end of the G7 gathering.

Prime Minister Justin Trudeau of Canada, who is hosting the summit, excoriated Trumps recent tariff decision | Kevin Dietsch/Pool photo via Getty Images

Trump administration officials have publicly sought to tamp down concerns that tariff blowback will dominate and derail the summit agenda, even as anxiety builds across the Atlantic that the two-day event will ultimately produce nothing at all.

Larry Kudlow, director of the National Economic Council, rejected the idea earlier Tuesday that the steel and aluminum tariffs had any damaging effects and praised Trumps trade policies generally, calling the president a “trade reformer.” He also lauded the strength of the U.S. economy and said officials would “take that story to the G7 meeting.”

“I hope its a G7 meeting,” he added in an interview on Fox News. “I hope its not a G-1-plus-six meeting, and I hope we can make some sense out of the whole story.”

Michael Crowley and Hans von der Burchard contributed reporting.

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