US isolated at G-7 meeting as tariffs prompt retaliation

The Group of Seven finance ministers and central bank governors meeting in Canada on Friday was a fraught affair, with six of the seven member states having harsh words for the seventh - the US - over its just imposed tariffs on steel and aluminium i
The Group of Seven finance ministers and central bank governors meeting in Canada on Friday was a fraught affair, with six of the seven member states having harsh words for the seventh - the US - over its just imposed tariffs on steel and aluminium imports.PHOTO: BLOOMBERG

WHISTLER (British Columbia) • The United States' closest allies have attacked the Donald Trump administration for its tariffs on steel and aluminium imports, and mounted challenges with the world's top trade body, fouling the mood at a Group of Seven finance leaders meeting.

US Treasury Secretary Steven Mnuchin was the prime target of the criticism at the Friday meeting of G-7 finance ministers and central bank governors in Canada, with the six other G-7 member countries subject to the US metals tariffs, which were imposed on national security grounds.

The tariffs are also complicating Washington's efforts to gain cooperation to challenge China's trade practices as US Commerce Secretary Wilbur Ross arrived in Beijing yesterday for talks aimed at averting a US-China trade war.

Japanese Finance Minister Taro Aso, whose country's steel and aluminium producers have been paying the US metals tariffs since March 23, called the US action "deeply deplorable". "This doesn't happen that often at G-7 meetings, but it was US against everyone else," Mr Aso told reporters.

The European Union and Canada have filed challenges with the World Trade Organisation.

Canadian Foreign Minister Chrystia Freeland said in a statement that the tariffs were "imposed under a false pretext of safeguarding US national security".

At the meeting in the ski resort of Whistler, Canadian Finance Minister Bill Morneau said he expressed to Mr Mnuchin "our absolute view that this is absurd that Canada could in any way be a security risk".

French Finance Minister Bruno Le Maire also said Mr Mnuchin was clearly isolated on the tariff issue, with the group devolved to a "G-6 plus one" with the six expressing "total incomprehension" over the destabilising US move.

"We must find a way to get out of this," German Finance Minister Olaf Scholz told reporters. "That was said clearly by everyone and I think it was even taken on board" by Mr Mnuchin.

Mr Mnuchin, regarded as one of the more moderate trade voices in Mr Trump's Cabinet, said the issue may need to be resolved by G-7 leaders at a summit this week in Charlevoix, Quebec, officials attending the meetings said.

The US tariffs of 25 per cent on imports of steel and 10 per cent on aluminium were imposed early last Friday on Canada, Mexico and the EU after they refused to accept steel and aluminium quotas in negotiations with Mr Ross.

Mr Trump took to Twitter again on Friday to castigate Canada after his testy exchange with Canadian Prime Minister Justin Trudeau the day before over rocky negotiations to update the North American Free Trade Agreement.

Mr Trump tweeted that Canada had treated US farmers "very poorly for a very long period of time". The White House said Mr Trump also told French President Emmanuel Macron of the need to "rebalance trade with Europe".

Mr Trump's words followed swift responses to the tariffs by Canada, Mexico and the EU, which plan to retaliate with levies on billions of dollars of US goods, including orange juice, whiskey, blue jeans and Harley-Davidson motorcycles.

Canada, the largest supplier of steel to the US, said it will impose tariffs covering C$16.6 billion (S$17.2 billion) on US imports, including whiskey, orange juice, steel and aluminium.

Mexico announced "equivalent" measures on a wide range of US farm and industrial products.

Officials at the G-7 meeting said the tariffs made it harder for the group to work together to confront China's trade practices, especially when Beijing, like most G-7 members, supports the World Trade Organisation-based trade rules that the US is seeking to go around.

Mr Le Maire asked Mr Mnuchin: "How can you get the Chinese to respect international law if you don't?"

REUTERS

A version of this article appeared in the print edition of The Sunday Times on June 03, 2018, with the headline 'US isolated at G-7 meeting as tariffs prompt retaliation'. Print Edition | Subscribe