G-20 calls for more dialogue on rising trade tensions

Monday, July 23, 2018

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BUENOS AIRES, Argentina (AP) — The world's top financial officials meeting in Argentina's capital yesterday called for more dialogue on trade disputes that threaten global economic growth, with one official warning that differences remain and tensions could escalate further.

The two-day gathering of G-20 finance ministers and central bankers in Buenos Aires took place as the United States and China are engaged in a full-blown trade war with both nations imposing tariffs on billions of dollars of each other's goods.

A final communiqué from the meeting said that although the global economy remains strong, growth is becoming “less synchronised” and risks over the short and medium terms have increased.

“These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth, particularly in some advanced economies,” the communiqué said. “We ... recognise the need to step up dialogue and actions to mitigate risks and enhance confidence.”

On Friday, US President Donald Trump renewed his threat to ultimately slap tariffs on a total of US$500 billion of imports from China — roughly equal to all the goods Beijing ships annually to the US. The White House has also itemised US$200 billion of additional Chinese imports that it said may be subject to tariffs.

The US has also imposed tariffs of 25 per cent on steel and 10 per cent on aluminium, including from Europe. China, the EU, Canada, Mexico and Turkey have counterpunched with taxes on US exports.

As the Group of 20 gathering wound up yesterday, European Financial Affairs Commissioner Pierre Moscovici said that differences of position remained despite the talks.

“These meetings have been taking place in an international context, which is very challenging,” Moscovici told reporters. “Trade tensions remain high and they threaten to escalate further.”

But Moscovici said the summit that began Saturday had not been “tense”, and that countries must remain “cool-headed and maintain a proper sense of perspective”.

Representing the US at the meetings was Treasury Secretary Steven Mnuchin, who on Saturday said the overall US economy has not been harmed by the trade battles set off by Trump's get-tough policies. But he acknowledged that some individual sectors have been hurt and said US officials are looking at ways to help them.

International Monetary Fund Managing Director Christine Lagarde has warned that a wave of tariffs could significantly harm the global economy, lowering growth by about 0.5 per cent “in the worst-case scenario”.

“Protectionism, I want to insist on that, is good for no one,” Moscovici said. “Trade wars are not easy ... they create no winners, only casualties.”

But Moscovici said that the EU remains open to dialogue.

“That's why EU President Jean-Claude Juncker and EU Trade Commissioner Cecilia Malmstrom will meet with Trump” in Washington, DC, this week, he said. “We hope this meeting will be productive and successful.”

So far, global markets have remained generally calm despite the US-China trade war and the other conflicts ignited by Trump.

But analysts say they expect Trump will impose more tariffs on China and potentially other key US trading partners. With those nations almost certain to retaliate, the result could be higher prices for Americans, diminished export sales, and a weaker US economy by next year.

The Group of 20 nations is composed of traditional economic powers such as the United States, Japan, and Germany and emerging economic powers including China, Brazil, India, and Argentina.

Officials in Buenos Aires also discussed issues including the future of work and infrastructure for development, the international tax system and financial inclusion. It is the third of five meetings by finance ministers and central bankers scheduled in advance of a main G-20 meeting in Argentina that will be held November 30–December 1.

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