G-20 leaders struggle to find compromise on trade policy

The U.S. continues to clash on specific trade policies with Europe and China, leaving in doubt how strong a unified stance the Group of 20 countries can take in the joint communique expected Saturday at their summit here.

“Should the U.S. introduce tariffs on European steel imports, Europe is ready to react immediately and adequately,” European Commission President Jean-Claude Juncker told reporters Friday ahead of the two-day summit of leaders from major industrial and emerging-market nations.

The EU might impose retaliatory duties on whiskey, orange juice and dairy products should the U.S. decide to raise steel tariffs, the Financial Times reported that day.

The U.S., under Section 232 of its Trade Expansion Act, can impose tariffs and other trade restrictions if imports are seen as weakening industries crucial to national security. Foreign products account for 30% of the American steel market. Additional tariffs mostly would target China, which is bolstering cheap exports due to overproduction at home, but Japan and Europe likely would feel the effects as well. Enacting Section 232 also may violate World Trade Organization rules.

Hiroshige Seko, Japan’s economy, trade and industry minister, expressed his concerns when he met with U.S. Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer at the end of June. “The root of the problem is China, and Japan is not causing any damage,” he said, according to a Japanese official.

Japan and Europe are wary of protectionist moves by the U.S. At the G-20 summit, Prime Minister Shinzo Abe discussed the broad trade agreement Japan reached Thursday with the European Union, drawing assent from several leaders when he called it vital for the two sides to show their strong resolve to fly the flag of free trade. It is unclear whether his message reached U.S. President Donald Trump.

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The Group of Seven also clashed on trade during their May summit in Italy. Trump initially wanted to remove the usual pledge to “fight protectionism” from their joint communique. The other leaders persuaded him against that move, but included different language that acknowledged his stance.

The G-20 decided at last year’s summit in China to create a global forum to tackle oversupply. The members agreed again Friday to address the issue. Meanwhile, Trump has slammed China for its efforts to protect domestic industries, a main cause of excess steel production that is flooding the global market with cheap Chinese exports. Such attempts truly deserve the labeling of protectionist, the Trump administration has argued.

The leaders see the global economy as recovering, but agreed that risks remain. They reaffirmed the need for fiscal, financial and structural reforms to guard against such risks. They also agreed to step up information sharing among tax authorities to tackle tax evasion.

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