(Bloomberg) -- President Donald Trump is headed for a showdown with America’s allies at a Group of Seven summit this week, with the European Union and Canada threatening retaliatory measures unless he reverses course on new steel and aluminum levies.
Trump changes his mind often enough that U.S. allies and rivals alike hope he’ll do just that on the duties. An all-out trade war may become unavoidable if he doesn’t.
“We still have a few days to avoid an escalation. We still have a few days to take the necessary steps to avoid a trade war between the EU and the U.S.,” French Finance Minister Bruno Le Maire said after a meeting of G-7 finance ministers and central bank governors in Whistler, British Columbia.
Meanwhile, the Trump administration is facing a warning from China that it’ll end negotiations to resolve trade tensions if the U.S. pursues planned tariffs on the Asian nation. Commerce Secretary Wilbur Ross discussed increasing China’s purchases of U.S. goods during a just-concluded visit to Beijing, the White House said on Monday, but its statement made no mention of shelving tariff plans.
The White House appeared unfazed by threats from allies. Top economic adviser Larry Kudlow said over the weekend the blame for any escalation lies with U.S. trading partners. Trump doubled down on that message Monday morning, taking aim at barriers against American agricultural exports.
“Farmers have not been doing well for 15 years. Mexico, Canada, China and others have treated them unfairly,” Trump tweeted. “By the time I finish trade talks, that will change.”
Investors appeared little rattled over the trade disputes. U.S. and European stocks advanced on Monday, tracking peers in Asia.
Finance chiefs from the group of wealthy nations emerged from three days of talks on Saturday united in their condemnation of Trump’s decision to impose tariffs on steel and aluminum imports from the European Union, Canada and Mexico, promising to press ahead with retaliatory measures unless Trump steps back.
It was a rare rebuke of a member nation by the group that foreshadows high drama when Trump meets leaders of the other six major industrialized nations Friday at a summit in the Quebec resort town of Charlevoix, near the border with Maine.
At the same time, Beijing is taking umbrage at Trump’s revival of threats to impose tariffs on $50 billion of Chinese imports, saying it could consider rolling back some of the commitments it made in recent negotiations to increase trade with the U.S.
The rebuke, which state-run Xinhua News Agency reported on Sunday, came after Chinese officials held negotiations over the weekend with a U.S. delegation led by Ross. The talks were the third round of discussions between the two countries since the trade spat started.
The U.S. gave little indication on how Ross’s meetings with Beijing went, saying on Monday that the delegation will now report back and receive guidance on next steps. Ross during his trip conveyed Trump’s “clear goal for achieving a fair trading relationship with China,” according to the White House statement.
A commentary by state-run China Radio International said that the government’s stance on canceling any agreements reached in the talks if Trump’s tariffs go into effect was a “red line.”
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