BUENOS AIRES,. US Treasury Secretary Steven Mnuchin yesterday urged China and the EU to respect “free, fair and reciprocal trade” as his French counterpart fired back that the US needs to “see sense” amid fears of a global commerce conflict.
Mnuchin arrived in Buenos Aires for the Group of 20 summit of finance ministers and central bankers at the end of a week in which US President Donald Trump ramped up his inflammatory remarks and threats regarding global trade.
But far from backing down on Trump’s outbursts, in which he described China, the EU and Russia as trade “foes,” Mnuchin backed his president, in particular over a threat to hammer China with punitive tariffs on the entirety of the US$500 billion in goods it exports to the US.
“It is definitely a realistic possibility, so I wouldn’t minimise the possibility. We’ve been very clear with our objectives,” Mnuchin told reporters ahead of the start of the two-day G20 summit that brings together the world’s 20 leading economies.
“We share a desire to have a more balanced relationship and the balanced relationship is by us selling more goods (to China).”
The US trade in goods deficit with China stood at almost US$376 billion in 2017.
Mnuchin said China must “open up their markets so we can compete fairly,” although he insisted that to do so would be “a tremendous opportunity for us and a tremendous opportunity for China.”
The brewing global trade conflict was always expected to dominate talks in the Argentine capital and Mnuchin made no secret that it is the US’s top priority.
Turning to the EU, Mnuchin said it would have to make considerable concessions in order for there to be a free-trade agreement with the US.
“My message is pretty clear, it’s the same message the president delivered at the G7: if Europe believes in free trade, we’re ready to sign a free trade agreement with no tariffs, no non-tariff barriers and no subsidies. It has to be all three.”
France’s finance and economy minister Bruno Le Maire hit back, urging the US to “see sense.”
“This trade war will produce only losers, it will destroy jobs and put pressure on global growth,” Le Maire told AFP.
“We call on the United States to see sense, to respect the rules of multilateralism and to respect their allies.”
Trump’s protectionist policies saw him slap tariffs on steel and aluminum imports, angering allies the EU, Canada and Mexico, and triggering retaliatory measures.
The US president has also threatened to put levies on foreign car imports — a big worry for Germany in particular.
“Global trade cannot be based on survival of the fittest,” Le Maire said.
International Monetary Fund chief Christine Lagarde opened the summit by reiterating her fears that increasing trade restrictions would hurt global GDP.
Lagarde said that taking into account “current announced and in process measures,” an IMF simulation indicates that in a worst-case scenario, a half point would be cut from global GDP, amounting to some US$430 billion.
Argentine economy stabilising
Small protests against the IMF were staged in central Buenos Aires both on the eve of the summit and yesterday, with locals angered by a 35 per cent plunge in the peso between April and June.
Argentina secured a US$50 billion IMF loan in June to stabilise its economy as investor confidence in crisis-hit emerging economies sunk, with some US$14 billion taken out between May and June.
“The Argentine authorities are implementing a decisive reform plan that has the support of the international community and is backed by the IMF,” said Lagarde.
“The Central Bank of Argentina has put in place measures that helped reduce financial volatility and improve transparency,” she added.
Lagarde said growth in the country would “stabilise in the last quarter of 2018” with a “gradual recovery in 2019 and 2020.”
Away from trade, Mnuchin moved to ease fears in the US that Trump would “jeopardise” Federal Reserve independence after he blasted the Fed’s interest rate hikes in a television interview aired on Thursday.
“The president has made it very clear to me that he supports the Fed’s independence,” said Mnuchin.
Sanctions was another issue on the agenda, with Mnuchin insisting North Korea would not benefit from “relief until real progress is made” on denuclearisation.
While he acknowledged the US and EU “don’t see eye to eye” on Iranian sanctions, he insisted they were agreed that “Iran should never have nuclear weapons.”
And he said sanctions on Venezuela were meant to “encourage better behaviour” from President Nicolas Maduro’s government and insisted it was “a reasonable guess” that Nicaraguan President Daniel Ortega and his allies would face penalties next.