Mnuchin at the G7: Don’t Expect Much on International Trade
US Secretary of the Treasury Steven Mnuchin is front and center on the world stage today and tomorrow as he attends two days of G7 finance minister meetings in Bari, Italy.
In March Mnuchin met with G20 leaders in Germany. The joint communique after the talks deleted the usual pro-trade language. Expect more of the same at the G7 meeting.
Since taking the oath of office, President Donald Trump’s protectionist words and actions on international trade caused anxiety among the US’s major trading partners. Mnuchin is meeting with counterparts—from Canada, Germany, Japan, Britain, France and Italy—at a time of geopolitical uncertainty, and international trade issues are a big part of that.
According to a report on CNNMoney, Italy, which, as current president of the G7 have the power to set the agenda, intends to exclude trade from the finance ministers’ talks. One Italian official opined that the Trump administration is unlikely to change its posture on trade.
Trump has taken a tough line on trade enforcement, ordering the Commerce Department to investigate whether steel imports pose a national security threat. He also pulled the US out of the Trans-Pacific Partnership and threatened to blow up NAFTA before backpedaling and announcing it intended to renegotiate the agreement with Canada and Mexico. The strategy appears to be to avoid international trade issues at all costs.
European officials also fret that Trump will pull out of the Paris climate change agreement and that he will rescind financial rules enacted after the financial crisis of 2008-2009.
Another fraught issue is currency manipulation. Trump has refrained from labeling China a currency manipulator, as he promised during the presidential campaign, but has placed Germany and Japan, key trading partners and allies, on a currency watch list.
Observers say trade issues will come up in private conversations between Mnuchin and Canadian Finance Minister Bill Morneau. The Trump administration imposed tariffs on Canadian softwood lumber and Canadian Prime Minister Justin Trudeau has threatened to ban exports of US coal through Canada’s Pacific ports.
A G7 summit will take place later this month in Sicily and the strategy for the finance ministers’ meeting appears to be to kick the can down the road. In other words: do nothing—and hope for the best when the G7 chiefs meet in a couple of weeks.