Cartoon by Signe Wilkinson

Trump and Allies Set for Showdown Over Trade

Bloomberg: President Donald Trump is headed for a showdown with America’s allies at a Group of Seven summit this week in Quebec, with the European Union and Canada threatening retaliatory measures unless he reverses course on new steel and aluminum levies.

China, while open to talks to resolve the dispute, is warning it will withdraw commitments it made on trade if the president carries out a separate threat to impose tariffs on the Asian country. While China doesn’t want an escalation in trade tensions, it will defend its core interests, according to a commentary published Monday by the state-run Economic Daily.

Trump changes his mind often enough that U.S. allies and rivals alike hope he’ll do just that on tariffs in the next few days. 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.

The White House appeared unfazed by threats from allies. Top economic adviser Larry Kudlow said the blame for any escalation lies with the U.S.’s trading partners. Trump doubled down on that message Monday morning, tweeting that China and Canada have unacceptable barriers against agricultural imports.

“The U.S. has made such bad trade deals over so many years that we can only WIN,” Trump tweeted.

Investors in Asia appeared little rattled by the talk of war, with stock markets in Japan, China, Australia and South Korea all up in trading on Monday.

The metal tariffs imposed on the European Union and Canada are the latest escalation by the U.S. on the trade front that has roiled financial markets for months and prompted the International Monetary Fund to warn of a trade war that could undermine the broadest global upswing in years >>>