G20 Finance heads say trade war as ‘intensified’

Group of 20 finance leaders agreed to describe global trade and geopolitical tensions as “intensified” but failed to express the desire to resolve them, three G20 sources said as the second day of meetings got underway on June 9.

After rocky negotiations that nearly aborted the issuance of a communique, the finance ministers and central bank governors gathered in Fukuoka, southern Japan, agreed to affirm language on trade issued in Buenos Aires last December, the sources with knowledge of the final communique language said.

The Buenos Aires meeting launched a five-month trade truce between the United States and China to allow for negotiations to end their deepening trade war. But those talks hit an impasse last month, prompting both sides to impose higher tariffs on each other’s goods as the conflict nears the end of its first year.

The G20 source said that the communique to be issued later on June 9 will say: “Most importantly, trade and geopolitical tensions have intensified.”

The communique will also say the G20 leaders “will continue to address these risks and stand ready to take further action,” the source told Reuters.

“We reaffirm our leaders’ conclusion on trade at the Buenos Aires summit.”

But the final language deleted a clause to “recognise the pressing need to resolve trade tensions” from a previous draft being debated on Saturday.

The deletion, which the sources said came at the insistence of the United States, shows a desire by Washington to avoid encumbrances as it increases tariffs on Chinese goods. The statement also contains no admissions that the deepening US-China trade conflict was hurting global growth.

The International Monetary Fund warned last week that the trade conflict would cut global growth next year, and financial markets had sold-off heavily as US-Sino ties soured.

US Treasury Secretary Steven Mnuchin said on June 8 he did not see any impact on US growth from the trade conflict, and that the government would take steps to protect consumers from higher tariffs.

TRUMP-XI SUMMIT

The widening fallout from the US-China trade war has tested the resolve of the group to show a united front as investors worry if they can avert a global recession.

The bickering over trade language has dashed hopes of Japan, which chairs this year’s G20 meetings, to keep trade issues low on the list of agendas at the finance leaders’ meeting.

Mnuchin said US President Donald Trump and Chinese President Xi Jinping would meet at a June 28-29 G20 summit in Osaka.

Mnuchin described the planned meeting as having parallels to the two presidents’ December 1 meeting in Buenos Aires, when Trump was poised to hike tariffs on $200 billion worth of Chinese goods.

Trump took that step in May and will be ready to impose a similar 25% tariffs on a remaining $300 billion list of Chinese goods around the time of the Osaka summit.

At the Buenos Aires meeting, the G20 leaders described international trade and investment as “important engines of growth, productivity, innovation, job creation, and development. We recognize the contribution that the multilateral trading system has made to that end.”

The leaders in that communique called for reform of the World Trade Organization rules that were falling short of objectives with “room for improvement,” pledging to review progress at the Japan summit.