'Trade war to produce only losers,’ French minister warns US

Marco Green
July 23, 2018

The last G20 finance meeting in Buenos Aires in late March ended with no firm agreement by ministers on trade policy except for a commitment to "further dialogue".

"These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth, particularly in some advanced economies", the G20 finance officials said in a communique.

German Finance Minister Olaf Scholz on Saturday reiterated calls for "free and fair world trade" at the G20 meeting in Buenos Aires.

U.S. President Donald Trump takes part in a welcoming ceremony with China's President Xi Jinping in Beijing on November 9, 2017. Trump on Friday threatened tariffs on all $500 billion of Chinese exports to the United States.

The finance ministers and central bank governors from the world's 20 largest economies warned that growth, while still strong, was becoming less synchronized and downside risks over the short- and medium-term had increased. But "we have to try to emphasize consensus because we recognize the importance of keeping this group alive and in harmony".

Global growth also may have peaked at 3.9 percent for 2018 and 2019, and downside risks have risen due to the tariff spat, the International Monetary Fund said.

But Treasury Secretary Steven Mnuchin reiterated his claim that the USA merely wants "more balanced trade" with other countries.

Mnuchin also dismissed the economic impact of the raft of tariff hikes and retaliatory duties, saying so far they have only affected the USA on a "micro" scale.

Trade is not on host country Argentina's published agenda for the July 21-22 ministerial, which focuses on the "future of work" and infrastructure finance.

Long-simmering trade tensions have burst into the open in recent months, with the United States and China - the world's No. 2 economy - slapping tariffs on $34 billion U.S. worth of each other's goods so far.

European Union finance chief Pierre Moscovici has said that the bloc is willing to build bridges in the ongoing trade dispute with the US.

US Treasury Secretary Steven Mnuchin told reporters on Saturday at the gathering of the financial leaders of the world's 20 largest economies in Buenos Aires that he was renewing President Donald Trump's proposal that G-7 allies drop trade barriers between them. He also has threatened to hit auto imports with duties which would be especially hard for Germany.

"If Europe believes in free trade, we're ready to sign a free trade agreement", Mr Mnuchin said, adding that such a deal would require the elimination of tariffs, non-tariff barriers and subsidies.

Mnuchin insisted the USA wants to "resolve the trade issues with the EU" and the complaint often is more about "non-tariff barriers" than tariffs.

"Americans and Europeans are allies, we cannot understand how us, Europeans, can be affected by United States trade tariffs", he said.

Mnuchin said he did not feel isolated at the G20, holding numerous bilateral meetings with officials, and arguing that Trump's trade stance was not based on protectionism, but on trying to make trade fairer.

Muscovici warned that "further trade escalation conflicts would negatively affect" all the countries involved, the U.S. included.

Explaining the report, Lagarde said: "It certainly indicates the impact that it could have on GDP (gross domestic product), which in the worst case scenario under current measures is in the range of 0.5 per cent of GDP on a global basis".

Other reports by Click Lancashire

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