G-7 finance leaders try to downplay tariff disputes, find consensus
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Group of Seven finance ministers and central bank governors attending their first meeting in Banff on May 21.
PHOTO: REUTERS
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BANFF, Alberta – Finance leaders from the Group of Seven (G-7) industrialised democracies sought on May 21 to downplay disputes over US President Donald Trump’s tariffs and find some common ground to keep the forum viable as they met in the Canadian Rocky Mountains.
The G-7 finance ministers put a positive spin on discussions in Banff, Alberta, to try to reach an agreement on a joint communique largely covering non-tariff issues.
The discussions included support for Ukraine, the threat from non-market economic policies of countries including China, and combating financial crimes and drug trafficking.
“I had a very productive day,” US Treasury Secretary Scott Bessent told reporters when asked about his bilateral meetings as he departed from the venue for a mountaintop dinner with fellow G-7 ministers and central bank governors.
The finance leaders were striving to avoid a repeat of a fractured G-7 finance meeting hosted by Canada in 2018, when Mr Trump’s first-term steel and aluminium tariffs made a joint statement impossible.
That meeting, described as the “G-6 plus one”, ended with Canada, Japan, Germany, France, Britain and Italy expressing “unanimous concern and disappointment” over Mr Trump’s tariffs.
Mr Trump’s tariffs are far more extensive this time
“There’s been a marked improvement in the mood,” a spokesperson for French Finance Minister Eric Lombard said after Mr Lombard’s bilateral meeting with Mr Bessent. “We had sincere and honest discussion between allies.”
Earlier, Mr Lombard said that he was willing to live without a joint statement as long as the G-7 reached a better understanding on better growth policies, the war in Ukraine and how to reduce trade imbalances. “And making progress is what matters ultimately. It’s not just a question of agreeing on a statement today for the sake of it,” Mr Lombard said.
But Italian Economy and Finance Minister Giancarlo Giorgetti took a different tack, saying on X that reaching a communique compromise was “a step we consider crucial”.
Ukraine discord
G-7 delegation sources said it remained unclear whether the leaders could agree on joint communique language. One European source said, for example, that US officials wanted to delete language describing Russia’s invasion of Ukraine
Mr Giorgetti said Italy is pushing a proposal to bar countries that have done business in support of Russia’s war effort from being part of Ukraine’s reconstruction.
The idea echoes what Mr Bessent said in April, that “no one who financed or supplied the Russian war machine will be eligible for funds earmarked for Ukraine’s reconstruction”.
China has been key in helping Russia circumvent Western sanctions and has served as a conduit of high-tech and battlefield goods such as drone components.
Delegates were discussing a possible lowering of the US$60-a-barrel G-7 price cap on Russian crude oil. “We expect a thorny discussion on the price cap,” one of the officials said.
The European Union is pushing to lower the price level as it works on an 18th package of sanctions against Russia aimed at Russian energy and the financing of sanctions circumvention.
“There is no agreement yet on the communique, but it’s fundamental that we get this communique. It would be serious if not agreed,” a European official said. “At the end of the day, we are only seven countries.”
Calming influence
A second European official said Mr Bessent’s participation in the meeting and efforts to try to find common ground provided some comfort to the group, describing him as “flexible”.
Mr Bessent skipped a much broader Group of 20 (G-20) finance meeting in South Africa in February, and a testy White House exchange between Mr Trump and South African President Cyril Ramaphosa raised more questions about Mr Trump’s participation in a November G-20 leaders’ summit.
A US source briefed on Mr Bessent’s positions said on May 19 that Washington would not agree to a joint statement unless it served US priorities, which include stronger G-7 steps to combat non-market practices such as China’s subsidies that have led to excess manufacturing capacity.
“The message we’re passing on to Bessent is that tariffs are not the correct response to dealing with global imbalances,” another European official said.
In a bilateral meeting, Mr Bessent and Japanese Finance Minister Katsunobu Kato agreed that the current dollar-yen exchange rate reflects fundamentals, the Treasury said in a statement which added that they did not discuss specific currency levels. Currency issues are a factor in Japan’s effort to negotiate a tariff-reducing trade deal with the US.
Canadian Finance Minister Francois-Philippe Champagne told reporters that he had a good meeting with Mr Bessent. “We get along very well. We got along very well,” Mr Champagne said but declined to provide specifics.
Mr Bessent also met Germany’s new finance minister, Mr Lars Klingbeil, on May 21. A German source at the G-7 meeting described the discussion as an open and constructive exchange that lasted longer than planned, and the two men agreed to meet again in Washington after Mr Bessent extended an invitation.
Japan, Germany, France and Italy all face a potential doubling of US duties to 20 per cent or more in early July.
Britain negotiated a limited trade deal
