G7 struggle to lighten darkening economic outlook
BIARRITZ, France — There were none of the customary references to “prosperity,” “economic growth” or “mutually beneficial trade” as leaders of the worlds richest democracies closed out their annual G7 summit on Monday.
And with good reason: They cant make any promises.
The fragile global economy, rattled by trade wars and protectionism, which seemed on the precipice of a painful downturn as leaders convened their meeting Saturday on the French Basque coast, remained just as vulnerable as the delegations packed their bags and headed home.
U.S. President Donald Trump arrived in France after sharply escalating his trade war with China — perhaps the gravest threat to the world economy, as the planets two largest markets remain locked in a bitter exchange of punitive tariffs. Even some gentle chiding by U.K. Prime Minister Boris Johnson did nothing to convince Trump to contemplate a truce.
After Trump briefly suggested on Sunday that he has had second thoughts about jacking up tariffs again, an aide clarified that the presidents only regret is not raising the levies even higher.
Trump did not escalate previous threats that he had made against the Europeans and he was uncharacteristically friendly to Merkel.
French President Emmanuel Macron, German Chancellor Angela Merkel and other G7 leaders used the summit to make a strong lobbying push, aimed at stopping Trump from further disintegrating global trade flows. But by the end, they only seemed to have patched up a bit of the worst damage done by the self-appointed “tariff man” by persuading him to soften his rhetoric against China, which had seemed to reach maximum bluster when he ordered American companies to shut operations there.
Monday raised a bit of hope for a détente with Beijing, with Trump declaring that the Chinese wanted to continue to negotiate, and he praised the talks he has been engaged in with them in recent months as “very meaningful.”
Trump also did not escalate previous threats that he had made against the Europeans and he was uncharacteristically friendly to Merkel, calling her a “brilliant woman,” while expressing optimism that the EU and U.S. could reach a trade deal “very soon.”
And as a silver lining, the U.S. and France appeared to reach a truce on their digital services tax spat — although Trump refused to publicly renounce his threat to impose punitive tariffs on French wine. In one other small bright spot, Washington agreed a preliminary trade deal with Japan.
No shortage of disagreement
None of those developments are particularly reassuring for advocates of free trade, however. There is no indication that the U.S. and China are in reality any closer to de-escalation, and past months have shown that Trump predictions of an upcoming “deal” with China tend to be short-lived: Sometimes, they only last until his next tweet.
The EUs trade talks with Washington also remain gridlocked as disagreement persists over Washingtons demand to expand the talks to include agriculture products. Despite the positive chatter at the Merkel-Trump meeting, neither of the leaders suggested any clear escape route from this standoff.
Meanwhile, the U.S.-Japan deal, while encouraging on its surface, on closer inspection contains provisions that are deeply worrying for the EU, which like Japan is under threat for tariffs on automobiles. Trump admitted outright on Monday that his blackmailing strategy of threatening sky-high tariffs on Japanese carmakers has forced Tokyo to make concessions, describing his auto tariffs as “one of the reRead More – Source