The annual gathering of G7 leaders normally represents an opportunity for the leaders of the United States, the United Kingdom, Canada, Germany, France, Italy and Japan to show a united front when it comes to pressing economic matters and geopolitical concerns that affect the world’s leading economies. Clearly, given the discord that was evident between the non-US members and the administration in Washington and their failure to agree on a joint communique, the leading economies set on a path of tariff conflict and countermeasures.
Certainly, US President Donald Trump has maintained a consistent stance on protecting traditional US industries, steel and aluminium and the automotive sector from his earliest days on the campaign trail. True to his word – and with the backing of voters in the rust-belt states of Michigan, Pennsylvania and Ohio who supported him by the millions – Trump has now taken measures to protect those elements. If anything, the other G6 leaders should have been aware that tariffs were coming.
It is clear that we are now facing a period in which protectionism and tariffs will be the norm, and that the prolonged period of free trade and far-reaching commercial deals will no longer be the norm. For now, the liberal thought process of globalisation is temporarily facing a roadblock.
While there certainly appears to be a disdain among the G6 for Washington’s protectionist attitude, there is a reality that some of those in the G7 should remember. Because of the sustained period of globalisation, where corporations grew beyond their national boundaries and became truly multinational, large companies in the G6 benefited greatly in the US – and are ideally placed now to still benefit within the confines of those tariffs. Italy-based Fiat now owns Chrysler, one of the US ‘Big Three’ automakers. Japan-based Toyota has plants in the US as well as the UK, and Germany-headquartered Daimler has Mercedes plants in the US south. In essence, all will continue to profit while operating in the new reality of tariffs and counter-tariffs.Yes, the normal genteel settings of the G7 gathering were unsettled perhaps by the confrontational tone, but it is not the end of the world. When good friends gather, there ought to be room for disagreements. At the end of the day, all will remain strong allies in the face of other life-and-death threats. Besides, all the parties at the Quebec gathering have access to the World Trade Organisation to dispute this temporary resetting of tariffs.
