This year’s G7 summit begins Friday in Canada at a time when tensions between the U.S. and the other six nations are on edge. Why, in a nutshell America wants new trade agreements, Germany, France, Italy, Canada, Japan and the U.K. say nope.
This year’s G7 summit begins Friday in Canada at a time when tensions between the U.S. and the other six nations are on edge. Why, in a nutshell America wants new trade agreements, Germany, France, Italy, Canada, Japan and the U.K. say nope.
Is this how Donald Trump Sees Himself?
With a backdrop that is already tense, across the pond you have the EU and UK struggling with a Brexit plan. In North America you have NAFTA talks broken down to the point that Canada and Mexico have been slapped with steel and aluminium tariffs after months of failed negotiations. It appears the EU didnt even consider a trade deal and have been slapped tariffs also.
The Group of Seven (G7) includes the work’s richest countries and in theory collectively the leaders of meet each year in order to discuss and coordinate their economic policies for the greater good.
This year’s G7 summit is the 44th and takes place in Charlevoix, Quebec.
There is more than trade, some would say its all Trump, others say the US has to be more aggressive to correct past failing policy that have hampered America unduly. For the Europeans and Canada they want no part of giving back any ground at this point hence the face off. Japan for it’s part seems to be in a more level mindset, President Trump and Prime Minister Abe meeting yesterday with their focus on North Korea.
There is no doubt the other nation’s leaders are embattled with issues at home and as mentioned earlier the existing trade problems. What a great misdirection to blame Trump and play us against them. There is more to it than that.
The U.S.also pulled the U.S. out of the Iran nuclear deal and is threatening foreign companies that still want to do business there that they are breaching sanctions. Last time around America withdrew from the Paris climate agreement. At least the U.S. didnt’t make the soccer world cup, sorry football world cup being held in Russia. There would be more to divide and no doubt more talk of Russian collusion.
G7 Family Photo 2018
At last year’s G7 Trump agreed to language in the final joint statement that indicated he was backing the fight against protectionism. That hasn’t been the case, though again many see this more about the U.S> writing new trade trade deals. It is rarely reported that many of these countries have large tariffs already against the US and other countries. Do yourself a facvor and do some research here.
The U.S. pulled out of the Paris accord the following week of the last G7 also, since then it had appeared President Trump and France’s President had made their peace, this week’s aggressive statements from Macron suggest otherwise. Macron is facing massive pressure at home with large strikes and civil unrest, so not hard to join the dots here.
The markets generally wait for the communique that is signed by all of the G7 leaders at the end for guidance. However this year’s joint statement may not be signed by the U.S. at all. Macron, said yesterday that this doesn’t mean there won’t be an agreement. Macron also said “When you’re saying that President Trump doesn’t really care, maybe you’re right, but no one lives forever.”
Then there is Canada who economically have struggled under prime minister Justin Trudeau, they have a record trade deficit, largely due to Trudeau’s energy policy and just today Canada’s May employment change came in at -7.5 K versus 23.5 K expected, lower than expectations.
Trudeau has warned that Trump’s tariffs “are hurting his own citizens. American jobs are on the line because of his actions.” Trump it seems has taken the comments from macron and Trudeau on board and got more aggressive, channeling Dirty Harry it with a ‘ make my Day’ approach.
The press has been going overtime with CNN running a story Trump was considering not showing up at all, until advisors pointed out that “canceling the visit entirely would appear like he’s shrinking from a fight he proudly began.”
Trump’s Repsonse (on twitter of course) on his Donald J. Trump Verified account @realDonaldTrump
Please tell Prime Minister Trudeau and President Macron that they are charging the U.S. massive tariffs and create non-monetary barriers. The EU trade surplus with the U.S. is $151 Billion, and Canada keeps our farmers and others out. Look forward to seeing them tomorrow.
The American president has said he will leave the summit early, missing the sessions on climate change and the environment. One does get the sense that if there is a breakthrough he will hang around and use that as a good faith signal. THough a breakthrough isn’t on the cards, unless there are cracks, the obvious one is the U.K. up against Germany, France and Italy.
Does May side with Trump or use the exercise to get a better Brexit deal? Keep your eyes peeled with an open mind. These negotiations are either game theory at play or seven egos running awry.
Updated with family photo
From the Traders Community Research Desk