Trump's Tariffs to Test Unity at Summit05/21 05:59

   Leading financial officials from the world's richest countries are gathering 
in a Canadian mountain resort this week for what may prove a contentious 
meeting in the wake of President Donald Trump's sweeping tariffs.

   BANFF, Canada (AP) -- Leading financial officials from the world's richest 
countries are gathering in a Canadian mountain resort this week for what may 
prove a contentious meeting in the wake of President Donald Trump's sweeping 
tariffs.

   The annual meetings of the Group of 7 finance ministers, known as the G7, 
are typically congenial and in previous years have produced joint commitments 
to combat inflation and counter the COVID pandemic. There may be less agreement 
this year as Trump's tariffs threaten to slow growth in many of the gathered 
nations, including host Canada, which Trump has also suggested become a 
potential 51st state.

   "I expect it will be somewhat of a testy conversation among the G7 
officials," said Eswar Prasad, an economist at Cornell University and former 
top official at the International Monetary Fund. "This is a very difficult 
period for the relationships among the G7 countries."

   The Trump administration has reached an initial trade deal with one G7 
member, the United Kingdom, and is engaged in talks with Japan and the European 
Union. But Canada still faces 25% duties on many of its exports to the United 
States, including autos, and the other three G7 members -- France, Germany, and 
Italy -- all face a baseline tariff of 10% on all their exports as part of the 
European Union.

   It will be the first formal meeting of the G7 attended by U.S. Treasury 
Secretary Scott Bessent, who participated in a brief G7 gathering last month on 
the sidelines of the International Monetary Fund and World Bank meetings in 
Washington, D.C. Federal Reserve Chair Jerome Powell will also attend along 
with central bank governors from the other G7 nations.

   "The message from colleagues is pretty clear is that a free and fair and a 
rules-based multilateral trading system, is a system in which we all win," 
Francois-Philippe Champagne, Canada's minister of finance, said Tuesday.

   While many finance ministers gathered in Banff this week will likely seek 
one-on-one meetings with Bessent, it's unlikely any trade deals will be 
reached, according to a person briefed on preparations for the meeting who 
spoke on condition of anonymity because they did not have authorization to 
speak about it publicly.

   Instead, the finance officials will seek to smooth the way toward any 
agreements before a meeting of the heads of state of the G7 countries in June 
in nearby Kananaskis, Canada.

   Bessent may be able to bring a more conciliatory tone to the meetings, 
Prasad said, as he is often seen as a relatively moderating influence on 
tariffs in the Trump White House.

   And there will likely be some areas of agreement, particularly around the 
Trump administration's goal to address what it calls "global imbalances" in 
world trade, a reference to the United States' large annual trade deficits, 
which reflects that it imports more than it exports. The White House sees China 
as the key driver of such imbalances. China has a large trade surplus.

   "Intentional policy choices by other countries have hollowed out America's 
manufacturing sector and undermined our critical supply chains, putting our 
national and economic security at risk," Bessent said in a speech last month 
during the IMF and World Bank meetings.

   The status of the U.S. dollar may also come up, at least in informal 
conversations. The dollar dropped in value unexpectedly last month after Trump 
unveiled his widespread tariffs, while the interest rate on Treasury bonds 
rose, a sign international investors may have been dumping American assets as 
confidence in the country's governance and economy eroded.

   "In the hallways, they're going to talk about nothing but tariffs and the 
dollar," said Steven Kamin, a senior fellow at the American Enterprise 
Institute and former senior economist at the Federal Reserve.

   At last year's meeting of G7 finance officials in Stresa, Italy, they agreed 
on a joint statement that said the members have a "strong commitment to a free, 
fair, and rules-based" trading system. It's not yet clear whether they will be 
able to agree on such a statement this year.

   Another question hanging over the meetings will be whether the G7 can come 
to agreement on a new round of sanctions on Russia. The European Union and U.K. 
announced sanctions on Russian oil Tuesday, targeting Russia's "shadow fleet" 
of unregistered oil tankers that are shipping its oil and allowing it to fund 
its war with Ukraine.

   Proposals to lower a price cap on Russian oil, set as part of earlier rounds 
of international sanctions, down from its current level of $60 may also be 
discussed in meetings Wednesday.

   Yet the Trump administration, while it has called for greater sanctions on 
Russian oil, hasn't yet signed on to the new restrictions. Trump spoke with 
Russian President Vladimir Putin and Ukrainian leader Volodymyr Zelensky on 
Monday, and said the two countries would soon begin ceasefire talks, though no 
details were available.

   Ukrainian Finance Minister Sergii Marchenko will also attend the G7 meetings 
this week, though Ukraine is not a member.

   Daleep Singh, chief global economist at PGIM Fixed Income and a former 
deputy national security adviser in the Biden administration, said the issue of 
Russian oil sanctions will be a key test of what unity remains in the G7.

   "If you're looking for something to engender a just and lasting peace, oil 
sanctions are the place to look," he said.