US-China trade war is now a global reality

French finance minister warns at G20 summit

Buenos Aires.

A trade war is now a global reality, French Finance Minister Bruno Le Maire has warned as G20 ministers gather for a summit in Argentina.

The current US trade policy of imposing unilateral tariffs is based on “the law of the jungle”, he said.

But US Treasury Secretary Steven Mnuchin defended the tariffs and urged the EU and China to open their markets to allow free competition.

Last week, US President Donald Trump described the EU as a “foe” on trade.

Mr Trump later threatened to impose tariffs on all $500bn (£380bn) of Chinese goods entering the US in a growing trade row.

The US has large trade deficits with both the 28-member EU and China.

The two-day talks in Buenos Aires bring together finance ministers and central bankers of the world’s top 20 economies.

What is a trade war and why should I worry? “World trade cannot base itself on the law of the jungle and the unilateral increase of tariffs is the law of the jungle,” Mr Le Maire told a news agency.

“The law of the fittest – this cannot be the future of global trade relations. The law of the jungle will only turn out losers, it will weaken growth, threaten the most fragile countries and have disastrous political consequences.”

He added that a trade war was now a reality, and that the EU could not consider negotiating a free trade deal with the US without America first withdrawing its tariffs on steel and aluminium.

The US defence is pretty simple

“My message is pretty clear, it’s the same message the president delivered at the G7 (last month in Canada): 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,” he said.

Mr Mnuchin said China had to open its markets “so we can compete fairly”.

“We share a desire to have a more balanced relationship and the balanced relationship is by us selling more goods [to China],” he said.

Trade deficits got the world there

Little has caused Donald Trump more annoyance than the trading deficits between the US and its major partners.

He believes that if you have a trade deficit – if you import more than you export – you are losing out.

Tackling what he has called “unfair trading practices” has become a key plank of his administration.

The European Union, China and the North American Free Trade Agreement (Nafta) countries, Mexico and Canada, have been his main targets.

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