Treasury Secretary Steven Mnuchin parried numerous warnings from other global finance ministers during two days of meetings in Buenos Aires, telling them that President Donald Trump is intent on reworking trade barriers in a way that promotes more U.S. exports.
“We need to be prepared to act in the U.S. interest … to defend free and fair and reciprocal trade,” Mnuchin said Tuesday. “And in doing that, there’s always a risk if we put tariffs on that other people will reciprocate, and there’s a risk of a trade war. The president has said we’re not afraid of getting into a trade war.”
Mnuchin added, however, that a trade war wasn’t the goal.
He wouldn’t say how many countries would be exempted from Trump’s tariffs on steel and aluminum imports, saying that the president would make these decisions speedily.
Foreign leaders have expressed alarm, then anger, and then confusion as Trump quickly rolled out a series of nationalist trade moves in recent weeks. First there were tariffs on solar panels and washing machines. Then came tariffs on steel and aluminum imports. And he’s now readying tariffs against more than 100 products manufactured in China, which the administration wants to roll out by the end of this week.
Mnuchin and other senior advisers have said Trump’s approach was well telegraphed and transparent, going back to his “America First” message during the 2016 presidential campaign.
But many elements of the trade agenda remain in flux. That is in part by design, as the Trump’s administration is seeking to splinter other countries and force one-on-one negotiations with the United States.
After initially lambasting Canada and Mexico over their trade stance, Trump has agreed to temporarily exempt them from the steel and aluminum tariffs, though its unclear for how long. Trump’s metal tariff plan allows other allies to apply for exemptions by promising other trade concessions.
He has also hinted about exempting Australia and that he wants a new trade relationship with the United Kingdom. Argentina’s finance minister, Nicolás Dujovne, asked Mnuchin for his country to be exempted during a 10-minute meeting on Tuesday, but Mnuchin was noncommittal.
The entire European Union has also demanded an exemption and threatened retaliatory tariffs on U.S. products if they don’t get one. Trump has left much of these decisions up in the air, the type of cliffhanger mystery that he became famous for during his career in reality television.
Decisions with even bigger implications loom as Trump continues threatening to withdraw from the North American Free Trade Agreement and a separate trade deal with South Korea.
Perhaps no country has worked harder to try to manage Trump’s approach to trade than Canada, which has worked with numerous members of Trump’s Cabinet and also sent top leaders to various U.S. states to meet with governors and business leaders. It’s that outreach that Canadian leaders believe has helped them impress on Trump how intertwined both countries’ economies are and – at least temporarily – shielded them from the steel and aluminum tariffs.
Canadian finance minister Bill Morneau said in an interview that he was not surprised by the approach Trump is taking, but he said other countries at the G-20 expressed more questions about what would happen next.
“Reasonably, when you say you are going to do something, and you follow through on it, there is going to be some sense of calibrating your efforts or maybe recalibrating your efforts based on reactions,” Morneau said. “And that’s a little bit of what we saw in the course of the discussions.”
But it became clear at this summit, organized by the Group of 20 leading economies, that Trump doesn’t plan to back down, regardless of the warnings from foreign leaders, members of his own Cabinet and top U.S. business executives.
G-20 meetings typically conclude with a joint statement, known as a communique, that reflects shared values and goals. Last year, Mnuchin refused to endorse past language in the communique that referred to a shared agreement to avoid protectionism.
In their joint statement issued Tuesday, the officials again stopped short of calling for an end to protectionism. Instead, they said that “we recognize the need for further dialogue and actions” related to trade. “We are working to strengthen the contribution of trade to our economies.”
In 2016, the G-20 issued a communique that said, “We will resist all forms of protectionism.” That language hasn’t appeared since.
“It is clear that the consensus that the world had up until [2017] is no longer the same,” said Dujovne, the Argentine official.
The G-20 nations began holding regular summits in 2008, with the gatherings designed to bring together the most powerful world leaders to address global problems. They have had mixed success.
At first, the G-20 aimed to design a unified approach to combating the Great Recession. Then the group pivoted to focus on ways to spur global growth. The Obama administration tried to use the G-20 to apply multinational pressure on China to change its currency policies. Oftentimes the meetings ended with incremental or uncertain success, a dynamic that Trump has ridiculed as ineffective.
The Trump administration has participated in the G-20 meetings but with limited goals, seeking instead to use it as a forum for rapid-fire bilateral meetings, or “pull asides.” Mnuchin held more than a dozen of those meetings while in Buenos Aires, gathering with the finance ministers of Germany, France and the United Kingdom and the top central banker in Japan.
Mnuchin uses these meetings to discuss the countries’ relationships but not typically for cutting deals, people familiar with the discussions said. Foreign leaders know he has access to Trump, but many are still confused whether anyone can actually negotiate on Trump’s behalf.
Trump believes that for decades U.S. trade policy has allowed other countries to send cheap products to the United States, which puts U.S. manufacturers at risk — all while imposing trade restrictions on U.S. exports to keep out American products.
After a year of Trump’s Twitter posts, verbal threats and private attacks, Trump’s cloudy trade agenda is now coming into focus. The steel and aluminum tariffs could begin by the end of this week. While Mnuchin was meeting with global finance ministers in Argentina, Cecilia Malmstrom, a European Union commissioner in charge of trade policy, was in Washington meeting with Commerce Secretary Wilbur Ross about possible exemptions.
Many foreign leaders have agreed that there is a global overcapacity of steel and aluminum, which most attribute to China’s vast expansion in recent decades. But the tariffs Trump has designed would not affect China as much as other U.S. trading partners, which is one reason Trump has put together a separate package of import duties tailored specifically for China.
The United States imports more than it exports, leaving a trade gap that Trump views as a global disparity but that many economists believe reflects the benefits of free trade and the power of the American consumer. In January, for example, U.S. companies exported $200.9 billion in goods and services and imported $257.8 billion in goods and services from overseas, according to data from the Bureau of Economic Analysis.
Each trade relationship is different, though. The United States has long-standing trade agreements with a number of countries meant to spur industries in both nations. For example, agriculture companies have tried to stop Trump from withdrawing from NAFTA because of how much they rely on buyers in Mexico and Canada for their products. But with other countries, particularly China, the trade relationship with the United States is more complex, as the two nations are major trading partners but eac
h side has accused the other of unfair practices to gain an advantage.
China responded to the threat of a massive package of tariffs from the United States on Tuesday by vowing to further open its own markets to foreign trade and investment, while warning that a trade war between the two nations would hurt both sides.
“No one will emerge a winner from a trade war,” China’s premier, Li Keqiang, said during a news conference at the conclusion of China’s annual parliamentary meeting in Beijing. “What we hope is for us to act rationally instead of being led by emotions.”
Trump believes that if he imposes import duties on other countries, it will either force them to relax their own import duties or help U.S. manufacturers compete. When Canada and EU officials threatened to retaliate for his steel and aluminum tariffs, Trump vowed to retaliate to their retaliation, an escalation that even he said would amount to a trade war.
Trump has garnered a reputation for threatening drastic action and then pulling back at the last moment in hopes of bluffing others into concessions. But several G-20 officials said they believed Trump was not planning to back down. And the implications of that would be unclear, forcing leaders in other countries to decide whether to follow through on their own threats, potentially risking economic growth in a number of countries to hold firm on nationalist principles.
“We haven’t seen a trade war of that dimension in decades, but that is a scenario that people are putting on the table, and we have to think about it,” said Alejandro Werner, director of the western hemisphere department at the International Monetary Fund.
