The leaders of the world’s seven largest advanced economies will meet in Canada but there is already talk of a six-country agreement with Trump the odd one out.

By Daniel Herborn

Posted on June 8, 2018

The Group of Seven (G7) is made up of the US, the United Kingdom, Canada, Germany, France, Italy and Japan. Collectively the group represents some 62% of the world’s wealth.

Each year, the leaders of the member nations meet to discuss big picture economic and social issues. The respective Finance Ministers of the countries also meet more regularly.

This year, Canadian Prime Minister Justin Trudeau hosts the event. He announced five themes for the summit which are:

  • Investing in growth that works for everyone
  • Preparing for jobs of the future
  • Advancing gender equality and women’s empowerment
  • Working together on climate change, oceans and clean energy
  • Building a more peaceful and secure world

These themes are likely to be overshadowed by the looming threat of a trade war as there has been mounting tension between US President Donald Trump and other G7 leaders over trade tariffs Trump imposed in March 2018.

Trudeau was incensed by the tariffs, saying US and Canadian soldiers “fought and died together on the beaches of World War II, on the mountains of Afghanistan and have stood shoulder-to-shoulder in some of the most difficult places in the world, that are always there for each other, this is insulting to that”.

French President Emmanuel Macron also struck a defiant tone towards Trump a day before the conference.

“You say the US President doesn’t care at all. Maybe, but nobody is forever,” he said.

“The six countries of the G7 without the United States are a bigger market taken together than the American market.

“There will be no world hegemony if we know how to organise ourselves and we don’t want there to be one.”

Macron also recently tweeted the other six member nations are “now a true international force” and may be prepared to enter into an agreement without Trump.

Before leaving for Canada, German Chancellor Angela Merkel told parliament she would approach the summit with goodwill but expected there would be divisions. “It is apparent that we have a serious problem with multilateral agreements here, and so there will be contentious discussions,” she said.

Seasoned American foreign affairs analyst Cliff Kupchan summed up the mood of the other six world leaders. “Trump’s going to get an earful from all of them,” he said.

Contention over the ‘Trump tariffs’

The tariffs came into effect on 1 June 2018 and imposed a 25% tariff on imported steel and a 10% tariff on imported aluminium. It applied to imports from Canada, Mexico and the European Union.

This move sparked talk of retaliatory tariffs on US goods and potentially an all-out trade war. Some influential members of the Republican Party (including House Speaker Paul Ryan) urged Trump to abandon the tariffs.

The European Union has lodged a dispute settlement case at the World Trade Organisation (WTO) over the tariffs. Cecilia Malmström, the EU Trade Commissioner, said: “If players in the world do not stick to the rule book the system might collapse and that is why we are challenging today both the US and China at the WTO.”

The tariffs have been generally rejected by economists. A survey conducted by Reuters found almost 80% of the 104 economists polled believed the tariffs would be a net harm to the US economy. None of the participating economists believed that the tariffs would be beneficial to the US economy.