G-20 meet: Europe shows unity in confronting US trade policy

Bloomberg

Finance chiefs from the world’s leading economies met in Buenos Aires at the weekend as trade tensions threaten to undermine the fastest growth in seven years.
Finance ministers and central bank chiefs met after US President Donald Trump accused Beijing and the European Union of gaming their currencies to boost exports. He also attacked the US Federal Reserve for raising interest rates and threatened to impose tariffs on almost all imports from China. G-20 members had the difficult task of agreeing on a final communique that provided an assessment of the global economy and offers policy recommendations while forging consensus.
Trade tensions threaten global growth as the engines of leading economies fall out of sync, the world’s top finance chiefs warned.
Global growth remains robust and many emerging-market countries are better prepared to face crises, but risks to the world economy have increased, finance ministers and central bankers from the Group of 20 nations said in a statement.
Policy makers from the European Union voiced support for a unified position in confronting the US over trade.
“One of the things that is very clear from this whole episode is that it is practically and legally impossible to strike a deal with one of the countries of the European Union, rather than with the European Union as a whole,” Dutch Finance Minister Wopke Hoekstra said in an interview.
Hoekstra’s comments echoed those of his German counterpart Olaf Scholz, who said “everyone is starting to realize that we will only be strong together.”
Trump’s unconventional measures on tariffs reflect years of grievances but ultimately aim at ensuring free and open trade, according to Australia’s Treasurer Scott Morrison.
“The tit-for-tat announcements on tariffs were an unconventional way to resolve those issues,” he said in an interview, adding: “There is legitimate frustration about the failure of the system to resolve the issues that concern the US and others.”
Canadian Finance Minister Bill Morneau said G-20 ministers didn’t get into the currency concerns raised by Trump in the first day of talks, and he doesn’t expect they will be brought up for discussion. Morneau said trade was ‘obviously’ one of the main areas of discussion though little progress was made.
Protectionist measures don’t benefit anyone, as it’s important to have fair, rules-based trade, Japan’s Finance Minister Taro Aso told reporters. He added that recurring trade imbalances should be addressed at a multilateral level, in a possible swipe at Trump’s go-it-alone policies.
The US must “return to reason” and rescind its tariffs on steel and aluminum imports before European countries discuss overhauling aspects of global trade, according to France’s
finance minister.
“We refuse to negotiate with a gun to the head,” Bruno Le Maire told reporters. “First of all we need the withdrawal of those tariffs before entering into any kind of discussion and negotiation” on matters such as international property or the World Trade Organization.
Should the US impose any additional tariffs, “we won’t have any other choice but to retaliate once again,” Le Maire said.
Global economic threats are undeniably on the rise, with emerging markets facing the biggest risks, Brazil’s Finance Minister Eduardo Guardia said.
International Monetary Fund Managing Director Christine Lagarde said she values the independence of central banks and added that current US tariffs would have a negative impact on global growth. When asked about Trump’s criticism of the Federal Reserve, Lagarde said “we always value the independence of central banks.”
“Independence is key,” Lagarde said at the G-20 meeting of finance ministers and central bank chiefs.

Threats include rising trade tensions, tightening monetary policy in the US and geopolitical issues, Guardia told reporters, echoing language from the March G-20 statement.
“We have the perception that these risks have grown since the last meeting,” he said. “Countries need to advance the process of economic reforms to build up their defenses.”
G-20 participants are working to produce a communique on Sunday that clearly expresses those concerns, the minister said, adding he doesn’t foresee any trouble negotiating the language with the US.
Bank of Japan Governor Haruhiko Kuroda, weighing in on the debate about currency wars, said it’s desirable that exchange rates reflect economic fundamentals.
US interest rates are likely to keep rising and the dollar is expected to gain as a result, reflecting the strength of the US economy, Kuroda told reporters. The normalization of US monetary policy stems from growth in the economy and rising prices, he added.
“For the US economy and the global economy, that is not a negative,” he said.
South African Central Bank Deputy Governor Daniel Mminele joined a growing chorus of finance and central bank officials pushing back on US President Donald Trump’s comments on trade and central banks.
“Central bank independence is absolutely sacrosanct in my view and there is ample evidence that independent central banks tend to be more successful,” Mminele said, in response to a question on Trump’s criticism of the Federal Reserve. He declined to specifically comment on Trump’s tweets about the Fed.
International Monetary Fund Managing Director Christine Lagarde said she values the independence of central banks and added that current US tariffs would have a negative impact on global growth.
When asked about US President Donald Trump’s criticism of the Federal Reserve, Lagarde said “we always value the independence of central banks.”
“Independence is key,” Lagarde said in Buenos Aires at the G-20 meeting of finance ministers and central bank chiefs.
Germany’s Scholz rejected President Donald Trump’s allegations that the EU was keeping its currency weak to gain trade benefits.
“The European Union carries out very rational politics, which are not geared at artificially creating economic successes through currency levels,” Scholz told reporters in Buenos Aires.