Buenos Aires: Treasury Secretary Steven Mnuchin faces a potentially cool reception on Monday from global policymakers, who are bristling at President Donald Trump’s steep tariffs on steel and aluminium imports.
The Group of 20 summit of finance ministers and central bankers will convene this week in Buenos Aires with the world on the cusp of a trade war over Trump’s new duties. Mnuchin, though, hopes to win consensus on pushing China toward further opening its markets, tightening regulations on cryptocurrencies, cracking down on terrorist financing, and increasing government debt transparency.
Mnuchin doesn’t regard the frictions over trade as a distraction, according to a senior Treasury official, who briefed reporters on the condition of anonymity.
“It may be a lonely spot for him,” said Timothy Adams, president of the Washington-based Institute of International Finance and a former Treasury undersecretary in the George W. Bush administration. Mnuchin “is going to have to ameliorate concern around the table. Hopefully for him there are enough carve-outs that he can walk back from some of the rhetoric.”
Mnuchin can expect to face stiff lobbying from his counterparts for exemptions from the tariffs, which take effect Friday. He’s scheduled to hold bilateral meetings with South Korea, Saudi Arabia, UK, Canada and Australia, the Treasury said.
Tariffs are top of mind for the G-20 countries, who worry that Trump isn’t done enacting protectionist trade barriers. In the draft of the group’s communique obtained by Bloomberg News, policymakers repeated a pledge to refrain from unfair trade practices and warned that the global economic expansion would be thrown into jeopardy if governments turn inward.
Mnuchin, who typically strikes a more diplomatic tone than the president, may look to quell those concerns. Trump recently said trade wars are “good, and easy to win,” but the Treasury secretary has repeatedly followed up to say that’s not what this administration wants.
China influence
One of Mnuchin’s primary aims at the summit is to gain greater visibility into loans China has made to developing countries. The Trump administration is concerned that the US’s top strategic rival is attempting to extend its influence with the loans while moving away from opening its markets to American goods.
Mnuchin also wants to tackle a European Union plan to tax digital companies such as Google Inc., Facebook Inc. and Apple Inc. Regulators in Europe have argued that tech companies have taken advantage of tax loopholes created by uncoordinated regulation across member countries on value-added that is virtual, not material. According to the Treasury official, the US will strongly oppose any measures that target digital companies.
Meanwhile, the European Union has said it may retaliate against Trump’s tariffs with its own duties on American bourbon, blue jeans, motorcycles and other politically potent products. Brazil may block Boeing Co.’s attempt to acquire plane maker Embraer SA.
It won’t be the first time Mnuchin is the odd man out at the gathering of countries that typically decry protectionism — he faced an international community irked by Trump’s “America First” message at last year’s meeting in Baden-Baden, Germany.
“At my first G-20 finance ministers I was very focused on the trade issue so I don’t think this should be anything new,” Mnuchin said in a March 7 phone interview with Bloomberg News. Last year, the secretary successfully fought to set aside the group’s previous pledges to avoid all forms of protectionism in the communique, later joking that the battle was the G-19 against one.
“The president has consistently talked about wanting to renegotiate trade deals and have fair and reciprocal trade — we’ve been very transparent with what we’re doing,” Mnuchin said.
Still, divisions within the G-20 may mute criticism of the new US duties. Russia’s senior official won’t attend this year, and China faces a slate of complaints about non-tariff barriers. Canada and Mexico are exempt from metals tariffs, provided they complete a renegotiation of the North American Free Trade Agreement.
— Bloomberg
