Last week you saw the G-7 great seven global powers begin a series of tense meetings over the United States and its new anti-liberal trading positions. It only seems like it will inevitably continue this week at the ongoing annual summit in Quebec, Canada. As the U.S. promises that the new steel and aluminum tariffs will also impact both Canada (Mexico) and the EU 27 countries, both blocks have threatened to retaliate in what is now a trade war in everything but name.
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American Tariff-Targeted Countries Respond Forcefully
Though not a member of the G-7 countries, China is similarly engaged in a last-ditched effort to resolve the international trade dispute in a valiant effort head off the imminent crushing tariffs on its metals exports. After two days of intensive negotiations, the Chinese opined that they are still open to further talks to work through the trade spat with the U.S. Yet Beijing pledged that it will revoke all concessions it has agreed to concerning trading should President Donald Trump make good on his threats to erect tariff barriers against the country.
The Chinese virulently insist that they seek to avoid a trade war but also claim that they will naturally defend their own core national interests, per commentaries appearing in the China state-run Economic Daily. The Europeans are not being so diplomatic with their threats. French Finance Minister Bruno Le Maire warned following a G-7 finance ministers and governors of central banks’ meeting that:
“We still have a few days to avoid an escalation. We still have a few days to take the necessary steps to avoid a trade war between the EU and the U.S.”
The Canadians were not being so composed in their response to the tariffs that could really hurt Canada’s export-driven economy. Prime Minister Justin Trudeau bitterly opined that he could not come to grips with the U.S. President’s assertion that Canada’s interests are somehow a threat to U.S. national security. Trump has invoked Section 232 to claim that Canada now represents a security threat to the United States. The prime minister said in his NBC interview on Meet the Press on Sunday that:
“One of the things that I have to admit I’m having a lot of trouble getting around is the idea that this entire thing is coming about because the president and the administration have decided that Canada and Canadian steel and aluminum is a national security threat to the United States.”
Washington did not quake at the ultimatums from across the pond and the other side of the Pacific. Top-level White House Adviser Larry Kudlow retorted that the Canadian leader was “overreacting” with his comments on the imminent tariffs. He mentioned in a Fox News Sunday interview that President Trump was retaliating to literally decades of abusive trade practices the U.S. has suffered unfairly from, with:
“Don’t blame Trump. Blame China, blame Europe, blame NAFTA, blame those who don’t want reciprocal trading, tariff rates, and protectionism.”
These metals tariffs erected against Canada and the EU are only the latest salvos in the trade tiff launched by the United States. It has turned financial markets upside down for months now. The International Monetary Fund is worried enough about its consequences to warn that a trade war will likely upset the biggest upturn in the worldwide economy in decades.
U.S. Finding Itself Completely Isolated at the G-7 Meetings
Saturday saw the conclusion of three tough days of talks. The fiance ministers all emerged unanimous in their reproach of President Trump’s choice to erect tariff barriers on aluminum and steel. All of the other six ministers promised they would move forward with punishing trade retaliation of their own if the American President did not pull back on the threatened punitive trade measures immediately. This graph below shows the growth of the various G-7 national economies relative to each other over the last few years:
Such a rebuke of a fellow G-7 member is almost unprecedented in recent times. It is against this backdrop that Trump will now sit down with the leaders of the other six major industrial nations this Friday in Charlevoix, Quebec, not far from the Maine border. The president was not taking the heat sitting down though. He tweeted over the weekend that:
“The U.S. has been ripped off by other countries for years on trade, time to get smart!”
President Trump has promised that the tariff contributions from members who pay will aid in covering the financial operations of the American government. He said the U.S. had nothing to lose from a “stupid trade” regime where the rules were already unfairly arrayed against American businesses. In particular, he referred to the amount of the U.S. trade deficit with China which recently amounted to a stunning $375 billion.
Unfair Chinese Trade Rankles President Trump
President Trump promised in the past week that he will move forward with the $50 billion tariffs against Chinese imports, all but ruining the progress of the trade talks over the weekend with the Middle Kingdom. The state China-controlled Xinhua News Agency from Beijing repeated the warning from the Chinese delegation that:
“If the U.S. rolls out trade measures including tariffs, all the agreements reached in the negotiations won’t take effect.”
Meanwhile back in Canada, the French Finance Minister Le Maire held open a narrow window of escape for the U.S. tariffs with the remarks that:
“We want to avoid a trade war. But everything is ready.”
This trade dispute has threatened perhaps the greatest internal crisis within the G-7 industrialized nations since the seven countries of Germany, the United Kingdom, France, Italy, Japan, the U.S., and Canada all began sitting down officially together on an annual basis. The G-7 finance heads issued a withering statement on the promised U.S. tariffs that such duties will ultimately:
“Undermine open trade and confidence in the global economy.”
It does not sound like a positive series of finance ministers resulted from this year’s G-7 meetings.
Is This Shaping Up to be the Worst Annual G-7 Meeting Ever?
French Finance Minister Le Maire went one further by stating what a frustrating G-7 series of meetings this year’s had been so far, with:
“It has been a tense and tough G-7. I would say it has been far more a G-6 plus one than a G-7.”
So far the European Union has selected a range of iconic American products to retaliate with tariffs of their own on, including Kentucky Bourbon and American Harley Davidson motorcycles. Both Mexico and Canada have also drawn up short lists for retaliatory tariffs against the U.S.
Treasury Secretary Steve Mnuchin attempted to sooth the infuriated U.S. allies at the close of the finance ministers meetings. He denied the idea that America is withdrawing from all of its customary leadership duties in the global economy with:
The President “has been very clear in wanting to address trade issues. Our objective is to make sure we have fair and balanced trade. There was a comment out there that it was the G-6 plus one. It was not. It’s the G-7. We believe in the G-7.”
This can only lead to a serious and painful global economic recession or even worse results in time. Now is the moment to protect your retirement portfolios. Start thinking about the Gold IRA rollover rules and regulations today.