OTTAWA (REUTERS) – Leaders of the Group of Seven (G-7) rich nations headed for a summit in Canada on Thursday (June 7) more divided than at any time in the group’s 42-year history, as US President Donald Trump’s “America First” policies risk causing a global trade war and deep diplomatic schisms.
In a bid to rebuild America’s industry, Trump has imposed hefty tariffs on steel and aluminium imports, including those from key G-7 allies like Canada, Japan and the European Union.
He has threatened to use national security laws to do the same for foreign car imports and has walked back on environmental agreements and an international deal to prevent Iran from building a nuclear bomb.
French President Emmanuel Macron, who has invested in a warm personal relationship with Trump, said that the other G-7 nations should remain “polite” and productive but warned that “no leader is forever”, a sign that Europe would not surrender meekly to the US president.
“Maybe the American president doesn’t care about being isolated today, but we don’t mind being six, if needs be,”Macron told reporters. “Because these six represent values, represent an economic market, and more than anything, represent a real force at the international level today,” he said.
Canadian Prime Minister Justin Trudeau predicted “robust discussions” on trade but other G-7 members like Japan and Italy seemed less likely to want to challenge the US president.
Trump will come face-to-face at the gathering in Charlevoix, Quebec, with world leaders whose views do not chime with his on a range of issues from trade to the environment as well as Iran and the construction of a new US embassy in Jerusalem.
Trump signalled that he was in no mood to compromise as he met Japanese Prime Minister Shinzo Abe, who has tried to cultivate a friendly relationship with the American president.
Trump raised the issue of US car imports with Abe at a meeting in Washington and said he wanted more investment plants in the American industrial heartland of Michigan, Pennsylvania and Ohio.
Abe is not the only world leader to have tried charming Trump and failed to come away with concessions from the US leader. Macron, who appeared to have built a warm relationship, said that the so-called “G-6” leaders would not spark a fight at the summit.
“In this environment, above all we always have to stay polite, stay productive and try to convince (them), to keep the United States on board because they are our historical ally and we need them,” Macron told a news conference with Trudeau in Ottawa.
The US president also has frosty relations with Trudeau, the summit host. Pleas by the other member countries for exemptions from the US steel and aluminum tariffs, which went into effect on June 1, have fallen on deaf ears in Washington.
“We will also obviously have some very robust discussions on trade,” Trudeau said. “I think there are questions about what is going to be the dynamic around the G-7 table...we (will) highlight and discuss many things we’re agreed on and have differences of opinion on other things,” he said.
The Canadian leader is embroiled in rows with Washington over steel and aluminium and negotiations over the North American Free Trade Agreement.
Macron stressed however that the United States was no longer the sole economic superpower in the world and urged other industrialised countries to stick together.
His plea for unity may fall, even within the European Union. Germany has suggested making accommodations over trade with the United States for fear of triggering a ratcheting up of tensions over cars that would embroil companies like BMW and Mercedes.
Europe faces renewed domestic economic and political challenges in addition to those posed by Trump’s unilateralism.
One source with knowledge of the matter said that Italy wanted to “create as much space as possible to continue the dialogue with the US”, noting that new Italian Prime Minister Guiseppe Conte, a political novice, would be treading carefully in Canada because he “needs to see the dynamics of the group.”
Japan is also expected to take a less confrontational approach than its G-7 peers, while still quietly pressing its case on trade.
Abe too has more at stake than tariffs and Trump reassured him that Washington would press Kim over the hundreds of Japanese citizens who have been kidnapped by North Korea. Japan has said it cannot normalise diplomatic relations without the issue being resolved.
Despite the lobbying and pleas, Trump has pressed ahead with tariffs as well as pulling out of the Paris climate accord. Intense diplomacy from Europe to save an international nuclear agreement with Iran also failed.
At the same time as taking on Europe and allies like Japan. Trump has told China, the world’s second largest economy, to cuts its massive trade surplus with the United States. Washington has also threatened tariffs on imports of Chinese goods unless Beijing stops stealing American companies’intellectual property.
Economically too, Europe may have more to fear if Trump does go for auto tariffs.
Its recovery from the 2008-9 financial crisis has been far slower than that of the United States where the Federal Reserve is on the cusp of another rate rise while the European Central Bank is still using crisis-era measures.
Financial markets around the world were battered by Trump’s trade threats, although they have recovered somewhat, they are still vulnerable and Italy’s new government is also a risk. Trump may have less to fear than slow-growing Europe and Japan from a trade war in terms of economic losses if the “G-6” pushes back on tariffs.
“This is unlikely to deter President Trump given the United States’ widening US$570 billion (S$760 billion) trade deficit, particularly if he feels cornered,” said Olivier Desbarres of economic strategy consultancy 4X Global Research.