On Saturday, leaders of seven industrialized nations (Canada, France, the U.S., the U.K., Japan, Germany, and Italy) signed a joint statement vowing to overcome protectionism and curb trade barriers as the G7 summit held in Quebec wrapped up.
But President Donald Trump rejected the communique produced in the summit, accusing his Canadian counterpart Justin Trudeau of making a false statement and being dishonest.
“Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at tariffs on automobiles flooding the U.S. Market!”, Trump tweeted.
Trudeau seemed to be polite during the conference, but later slammed Trump’s tariff and stated he would not support it.
“PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, ‘US Tariffs were kind of insulting’ and he ‘will not be pushed around. Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!, Trump lashed out. Trump made harsh tweets after leaving for Singapore for a historic summit with North Korean leader Kim Jong-Un on June 12.
Trudeau emphasized that Canada would retaliate in responding to the Trump administration’s import duty on Canada, Mexico, and the E.U.
“Canadians are polite, we’re reasonable but we also will not be pushed around,” the young prime minister stated.
The G7 communique highlighted several joint priorities including trade, economic growth, national security, and sustainable development. At one point, the statement said, ”We acknowledge that free, fair and mutually beneficial trade and investment, while creating reciprocal benefits, are key engines for growth and job creation,”
The U.S and the European Union (E.U.) were involved in a trade spat following Trump’s decision to impose steel and aluminum tariffs on the E.U., Canada and Mexico. The E.U. hit back by saying the unilateral tariff cannot be justified and violated the regulation of the World Trade Organization (W.T.O.).
E.U. steel exports to the U.S contributed to only 0.3 percent of the bloc’s overall exports worldwide, accounting for 0.05 percent of the organization’s GDP, the data from the Dutch bank ING showed.
But the consequences of tariff wars could be severe. Some analysts say if both retaliate by imposing various tariffs, U.S growth will drop 0.4 percent and E.U. growth will be affected 0.3 percent.
The trade war
The E.U. reacted quickly after Trump’s announcement on tariffs and the G7 summit. The bloc showed a unity to tackle trade barrier in the G7 joint statement. But it is uncertain how the 28-nation E.U. will put aside the differences to pursue a common goal.
Italy has the most populist government ever and Spain is being ruled by a minority political party. Eastern European nations such as Hungary and Poland are testing the E.U. with their non-democratic policies and the U.K. is on the way out.
Many trade experts assume that the E.U. will be forced to cede to the U.S., meaning the bloc will open its market to American’s export for the sake of Trump’s tariff and aid.
Kjersti Haugland, chief economist at DNB Markets, an investment bank in Norway, said:” “The U.S. is more powerful than the E.U., and the E.U. is facing many challenges. “I don’t think they will be strong enough to rally against this. They are not willing to pay the price.”
The E.U. is also facing trade challenges after the U.S. said it will impose sanctions on European companies doing business with Iran following the Trump administration’s withdrawal from the Iran nuclear deal.
Will the trade war continue?