Banff, Alberta (AP) – The main financial officials of the richest countries in the world meet this week in a Canadian mountain station for what could prove a controversial meeting following the radical rates of President Donald Trump.
The annual meetings of the group of 7 finance ministers, known as G7, are generally sympathetic and in previous years have produced joint commitments to combat inflation and counter the cocovid pandemic. There may be less agreement this year when Trump’s prices threaten to slow growth in many gathered countries, including the host Canada, that Trump has also suggested becoming a 51st potential state.
“I expect it to be a conversation with a little try between G7 officials,” said Eswar Prasad, economist at Cornell University and former senior official of the International Monetary Fund. “This is a very difficult period for relations between G7 countries.”
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The Trump administration has concluded an initial trade agreement with a member of the G7, the United Kingdom, and is engaged in talks with Japan and the European Union. But Canada still faces 25% of rights to many of its exports to the United States, including cars, and the other three G7 members – France, Germany and Italy – are all facing a basic tariff of 10% on all their exports as part of the European Union.
It will be the first official meeting of the G7 to follow by the American secretary of the Treasury, Scott Bessent, who participated in a brief gathering of the G7 last month on the sidelines of the International Monetary Fund and World Bank meetings in Washington, the federal president of the DC reserve, Jerome Powell, will also attend governors of the Central Bank of the G7 Nations.
“The message of colleagues is quite clear is that a free and fair multilateral trade system is a system in which we all win,” François-Philippe’s champagne, Minister of Canada of Finance on Tuesday.
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While many finance ministers gathered in Banff this week will probably seek individual meetings with Bessent, it is unlikely that trade agreements are concluded, according to an informed person of the preparations for the meeting which spoke under the cover of anonymity because they did not have the authorization to speak about it publicly.
Instead, finance officials will seek to smooth out all agreements before a meeting of the G7 countries of state in June in Kananaskis, Canada.
Bessent can be able to bring a more conciliatory tone to the meetings, said Prasad, because it is often considered a relatively moderating influence on Trump’s White House prices.
And there will probably be certain areas of agreement, in particular around the Trump administration’s objective to tackle what he calls “global imbalances” in world trade, a reference to major annual trade deficits in the United States, which reflects that it is more important than it exports. The White House sees China as the main engine of these imbalances. China has a large trade surplus.
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“The intentional political choices by other countries have dug the American manufacturing sector and undermined our essential supply chains, putting our national and economic security in danger,” said Bessent in a speech last month during IMF and World Bank meetings.
The status of the US dollar may also appear, at least in informal conversations. The dollar dropped unexpectedly last month after Trump unveiled his widespread prices, while the interest rate on treasury bonds has increased, a sign of international investors may have spilled American assets while confidence in governance and the country’s economy has been eroded.
“In the corridors, they will only talk about prices and the dollar,” said Steven Kamin, principal researcher at the American Enterprise Institute and former principal economist at the Federal Reserve.
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During last year’s meeting of the G7 finance officials in Stresa, Italy, they agreed with a joint declaration which said that members have a “strong commitment to a free, fair and rules based on rules”. It is not yet clear if they will be able to agree on such a declaration this year.
Another question on meetings will be whether the G7 can reach a new cycle of sanctions against Russia. The European Union and the United Kingdom announced on Tuesday sanctions against Russian oil, targeting the “shaded fleet” of Russia of unregistered oil tankers who send its oil and allowing it to finance its war with Ukraine.
Proposals to reduce a price ceiling on Russian oil, established in the previous cycles of international sanctions, down compared to its current level of $ 60 could also be discussed during meetings on Wednesday.
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However, the Trump administration, when it called for larger sanctions against Russian oil, has not yet signed the new restrictions. Trump spoke with Russian President Vladimir Putin and Ukrainian chief Volodymyr Zelenskyy on Monday, and said the two countries would soon start cease-fire talks, although no details were available.
The Ukrainian Minister of Finance, Sergii Marchenko, will also attend the G7 meetings this week, although Ukraine is not a member.
Daleep Singh, world -class economist at PGIM Fixed Revenue and former Deputy National Security Advisor to the Biden Administration, said the issue of Russian oil sanctions will be a key test of the unit remains in the G7.
“If you are looking for something to generate just and lasting peace, oil sanctions are looking for,” he said.
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