The widening gulf between the United States and some of its biggest trading partners grew even larger over the weekend.
In a rare and striking act, six of the seven countries that make up the G7 (Group of Seven), an informal bloc of some of the nation’s most powerful industrialized countries, came together on Saturday to condemn its seventh member, the US, over Trump’s latest tariffs on steel and aluminum.
And on Sunday, the third round of trade talks between the US and China concluded without a breakthrough, which means that the US is currently still on track to impose sweeping tariffs on $50 billion of Chinese goods. China has promised to retaliate against the US’s tariffs, raising the possibility of a trade war between the world’s two largest economies. China also warned on Sunday that US tariffs could torpedo any chance of a future trade deal between the two countries.
Still wondering what these new developments mean? Read on. We’ve got you covered.
Trump triggered a rare display of division within the G7
On Saturday, finance ministers from six of the G7 nations — Canada, France, Germany, Italy, Japan, and the United Kingdom — issued a statement expressing “unanimous concern and disappointment” over the tariffs Trump has imposed on their steel and aluminum exports to the US.
In the statement, the countries said that Trump’s recent trade policies “undermine open trade and confidence in the global economy” and required “decisive action” in response.
Analysts say it was a rare display of division within the bloc — a reaction to an unforeseen scenario. For decades, the US has led the push to establish free trade norms around the world and persuade countries to eliminate their trade barriers. But now it’s other countries that are chiding the US for trying to seal itself off from the global trading system.
The US now has heavy tariffs in place on steel and aluminum shipments from every other member of the G7. On Thursday night, Trump imposed 25 percent tariffs on steel and 10 percent tariffs on aluminum from the European Union, Mexico, and Canada. And he had imposed those same tariffs on Japan in March. Now every country that’s been subjected to Trump’s steel and aluminum tariffs is making plans to potentially retaliate with tariffs of their own. Europe is considering targeting American bourbon, jeans, and motorcycle exports.
It’s not just the tariffs that are making close US allies upset — it’s also the way the US is trying to justify them. The Trump administration has invoked an obscure bit of US trade law known as Section 232 to argue that the US needs to block foreign steel and aluminum exports and boost domestic production in order to protect its national security needs.
But all the countries that Trump is targeting with tariffs are close allies of the US, and object to the idea that they would jeopardize the US’s security.
“The idea that we are somehow a national security threat to the United States is, quite frankly, insulting and unacceptable,” Canadian Prime Minister Justin Trudeau told Meet the Press on Saturday.
The US and China are playing a dangerous game of chicken
On Sunday, the US and China wrapped up their third round of talks. The US is hoping to reach an agreement with China in which it agrees to buy more goods from the US and drop some of its unfair trade practices, like the way it forces US companies trying to do business in China to hand over their technology to Chinese companies.
But it appears that the talks broke no new ground — which means the possibility of a trade war between the world’s two largest economies is closer than ever.
US Commerce Secretary Wilbur Ross and Chinese Vice Premier Liu He didn’t release a joint statement after their meeting, the way that the US and China did after the past talk. But China did release its own statement, warning that the US could obliterate any progress made in the talks by moving ahead with the tariffs it’s threatened to impose on Chinese high-tech goods.
“All economic and trade outcomes of the talks will not take effect if the US side imposes any trade sanctions, including raising tariffs,” the Chinese government said in a statement.
The White House has said a final list of $50 billion worth of Chinese goods that will be subject to tariffs will be announced on June 15, and that the measures will go into effect “shortly thereafter.”
China, for its part, has promised to respond with tariffs on $50 billion worth of US goods, which could deal serious damage to the US agricultural industry.
Whatever actually happens next, it seems clear that Trump’s proposed tariffs will have far-reaching consequences.