Japan's Aso `Feels Sorry' for Mnuchin Amid Outrage Over Tariffs
(Bloomberg) -- U.S. Treasury Secretary Steven Mnuchin faced so much criticism from his Group of Seven counterparts this week over new trade levies that Japanese Finance Minister Taro Aso said he almost ‘felt sorry’ for the U.S. finance chief.
“He’s not directly in charge of the metal tariffs, so in that sense it was very tough for him,” Aso told reporters after the second day of G-7 finance minister meetings in Whistler, British Columbia. “I felt sorry for him, but I guess it’s not the sort of issue I should sympathize with.”
The G-7 officials expressed frustration over how the U.S. is alienating its historical trading partners with new tariffs on steel. They cautioned the Americans are losing sight of the real challenges faced by the global economy, even as they held out hope of a change of heart.
“We will be divided -- it will not be a G-7, it will be a G-6 plus one,” French Finance Minister Bruno Le Maire said in a Bloomberg Television interview at the meeting in a ski resort near Vancouver. “It is dangerous for growth, dangerous for the economic development of the world, and dangerous for our jobs in the EU.”
The trade disputes are hijacking a summit that was initially seen as an opportunity to tout the successes of the global economic upswing, and is severely testing the resiliency of economic ties among Western nations. Canada and the European Union have said they will take immediate steps to retaliate after the Trump administration imposed steel and aluminum duties on national security grounds.
Frictions in Whistler this weekend could foreshadow even more high-drama at a G-7 leaders’ summit next week in Quebec that Trump will attend.
“We won’t negotiate under pressure. We will never accept to negotiate under pressure,” said Le Maire, adding that the EU should be granted an exemption to the metal tariffs.
The security designation used by Trump to justify the tariffs has been particularly grating to the Europeans and Canadians.
“We’re obviously all very disappointed as close allies and partners of the U.S. that they have taken this step, especially as they’ve taken it on national security grounds,” U.K. Chancellor of the Exchequer Philip Hammond said in a separate interview with BNN Bloomberg Television. He said the leaders summit next week may offer an opportunity to resolve the dispute.
“We know that President Trump’s way of doing business is very personal and the fact that he is going to have direct interactions with the leaders of the countries most affected by these measures gives us hope,” Hammond said.
Mnuchin, who is representing the U.S. at this week’s meetings, bore the brunt of the attacks, and is scheduled to speak to reporters at the end of the meetings Saturday.
German Finance Minister Olaf Scholz said the U.S. levies on imported metals from the European Union, Mexico and Canada are probably illegal. Canadian Finance Minister Bill Morneau said he’ll “clearly” express his displeasure to Mnuchin with the protectionist measures.
“The decision by the U.S. government to unilaterally implement tariffs is wrong, and -- from my point of view -- also illegal,’’ Scholz told reporters. “We have clear rules, which are determined at the international level, and this is a breach of those rules.”
Mnuchin held a string of bilaterals in the first few hours after his arrival in Whistler, meeting individually with Japan’s Aso, Scholz and Morneau. While a Treasury Department readout of the Aso meeting made no mention of trade coming up in the discussions, a Japanese finance ministry official said the trade dispute was discussed.
Mnuchin deflected some of the criticism, urging his counterparts to talk to Trump, according to Aso.
“He was in a tough spot, tough, tough,” the Japanese minister said. “In all honesty, this issue, I can’t do anything about it, you have to say it directly to Trump otherwise nothing will change.”
In imposing the tariffs, Trump invoked a seldom-used section of a 1960s trade law that allows him to erect trade barriers when imports imperil national security. Trump in March imposed 25 percent duties on imported steel and 10 percent on aluminum, but he gave temporary reprieve to a handful of allies for further talks to take place.
That reprieve ended Thursday, prompting swift retaliation from Canada, which announced duties on $12.8 billion worth of U.S. imports, ranging from steel to whiskey and maple syrup. The EU meanwhile said it would impose levies on 2.8 billion euros ($3.3 billion) of goods, including Harley Davidson motorcycles.
The U.S.’s ire is misdirected, Le Maire said, since the real cause of global oversupply of steel is due to Chinese production.
He said the dispute is also distracting the G-7 from dealing with real problems in global trade, such as the need to pressure China in particular on some of its practices with respect to intellectual property protection and state funding of its economy.
“A trade war is not in the interest of Europe, not in the interest of the United States,” said Le Maire. “I think that we should use G-7 to all discuss together -- the six states, plus the United States -- to try to find a way out.”
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