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American Shipper

G7, China warn against U.S. tariffs

Finance ministers from the Group of Seven expressed “unanimous concern and disappointment,” while China threatened to pull out of U.S. trade negotiations entirely.

   Economic leaders from the Group of Seven (G7) — which in addition to the United States consists of Canada, France, Germany, Italy, Japan and the United Kingdom — and the Chinese government are warning the U.S. against the imposition of a wide range of tariffs.
   Finance ministers and the heads of central banks from G7 met for two days of discussions last week in Whistler, British Columbia, during which they expressed concerns “that the tariffs imposed by the United States on its friends and allies, on the grounds of national security, undermine open trade and confidence in the global economy,” according to a summary from the Canadian government, which is the current G7 chair and host of the group’s 44th annual summit event in Charlevoix, Quebec, this Friday and Saturday.
   The statement follows announcements last week that the United States would not exempt key trading partners and close military allies Canada, Mexico and the European Union from tariffs on imports of steel and aluminum, a move that sparked widespread opposition from U.S. labor groups and federal lawmakers alike.
   First announced in early March, the 25 percent tariff on steel imports and 10 percent tariff on aluminum are pursuant to a Commerce Department investigation under Section 232 of the Trade Expansion Act of 1962 that found those imports pose a threat to national security, a claim with which U.S. security allies have taken issue.
   Canada, Mexico and the EU had been granted temporary exemptions from the metals tariffs, but those exemptions expired June 1, prompting all three to publish lengthy lists of planned retaliatory tariffs on U.S. exports.
   The G7 economic leaders in Whistler requested that U.S. Treasury Secretary Steven Mnuchin “communicate their unanimous concern and disappointment” in the decision to President Donald Trump and his administration, and said “decisive action is needed” at the upcoming leaders’ summit in Charlevoix.
   “The aim of this should be to restore collaborative partnerships to promote free, fair, predictable and mutually beneficial trade,” the statement said.
   “We’re concerned that these actions are actually not conducive to helping our economy, they actually are destructive, and that is consistently held across the six countries that expressed their point of view to Secretary Mnuchin,” Canadian Finance Minister Bill Morneau said at a press conference after the event, according to a report from Reuters news service.
   During the same briefing, Japanese Finance Minister Taro Aso noted that “this is a very rare case where opposition against the United States was unanimous.”
   “The G7 ought to collectively tell China to follow global rules,” said Aso. “By taking measures that violate G7 and World Trade Organization rules, the United States is actually benefiting China. That’s wrong.”
   Mnuchin, on the other hand, told reporters separately that the Trump administration would remain focused on “rebalancing our trade relationships” and disagreed with comments from Aso and other G7 officials indicating the U.S. might be in violation of international trade rules.
   Prior to the comments from Canada, Trump said on Twitter Sunday morning, “The United States must, at long last, be treated fairly on Trade. If we charge a country ZERO to sell their goods, and they charge us 25, 50 or even 100 percent to sell ours, it is UNFAIR and can no longer be tolerated. That is not Free or Fair Trade, it is Stupid Trade!”
   Beijing, meanwhile, threatened to pull out of trade negotiations entirely if the United States moves forward with the previously announced imposition of tariffs on roughly $50 billion annually in Chinese goods.
   “All economic and trade outcomes of the talks will not take effect if the U.S. side imposes any trade sanctions, including raising tariffs,” the Chinese government said in a statement, according to a report from the Chinese state-run Xinhua News Agency.
   It should be noted that these tariffs, imposed under Section 301 of the Trade Expansion Act, are completely separate from the Section 232 tariffs and are not based on any alleged national security concerns.
   The Trump administration last week announced it would move forward with those Section 301 tariffs just over one week after Mnuchin said it would put its proposal on hold in order to continue trade negotiations with China in good faith. The Treasury secretary later clarified that China would still be subject to the Section 232 tariffs on steel and aluminum, regardless of any bilateral deal.
   The latest comments from the Chinese government followed several weeks of meetings between delegations led by U.S. Commerce Secretary Wilbur Ross and Chinese State Council Vice Premier Liu He, special envoy of President Xi Jinping, in Washington, D.C., and China.
   Beijing and the White House issued a joint statement two weeks ago that said both sides had agreed to take steps to “substantially” reduce the bilateral trade imbalance between the United States and China, increase U.S. exports of agriculture and energy, and enhance protections for intellectual property.
   “To implement the consensus reached in Washington, the two sides have had good communication in various areas such as agriculture and energy, and have made positive and concrete progress while relevant details are yet to be confirmed by both sides,” the Chinese government said Sunday.
   “The attitude of the Chinese side remains consistent,” the statement read, adding that the government is open to increasing foreign imports in order to meet surging demand in China. “Reform and opening up as well as expanding domestic demand are China’s national strategies. Our set pace will not change.”
   Beijing added, however, that any and all trade talks with the United States “should be based on the prerequisite that the two parties meet each other halfway and will not engage in a trade war.”