BANFF, Alberta (AP) — Financial leaders from the world’s richest nations convened this week at a picturesque Canadian mountain resort, facing a meeting that could prove contentious due to President Donald Trump’s recent tariffs.
Historically, the annual Group of 7 (G7) finance ministers’ meetings are characterized by cooperation and shared goals, focusing on tackling global issues like inflation and the effects of the COVID pandemic. However, this year’s gathering may lack the usual camaraderie, as many participating nations, including host Canada, find their economies under pressure from the tariffs implemented by the Trump administration.
“I expect it will be somewhat of a testy conversation among the G7 officials,” noted Eswar Prasad, an economist from Cornell University and a former high-ranking official at the International Monetary Fund. He emphasized that the current climate marks a challenging phase for inter-nation relations among G7 countries.
The United States has successfully negotiated an initial trade deal with the United Kingdom and continues discussions with Japan and the European Union. Meanwhile, Canada faces a stiff 25% duty on numerous exports to the U.S., such as automobiles. Additionally, France, Germany, and Italy contend with a baseline 10% tariff on all their exports because of their membership in the European Union.
This gathering marks the first official meeting for U.S. Treasury Secretary Scott Bessent, who previously attended G7 discussions briefly in Washington, D.C. alongside the International Monetary Fund and World Bank meetings. Federal Reserve Chair Jerome Powell is also expected to join the other G7 central bank governors at this significant meeting.
Canada’s Finance Minister, Francois-Philippe Champagne, expressed optimism about the potential for discussion, stating, “The message from colleagues is pretty clear; a free and fair and a rules-based multilateral trading system is a system in which we all win.”
As anticipation builds, many finance ministers are likely to initiate one-on-one discussions with Bessent, though expectations for substantial trade agreements to be reached remain low, according to a source familiar with the preparatory stages of the meeting who spoke on the condition of anonymity. Instead, officials will be laying the groundwork for potential consensus ahead of the G7 heads of state meeting scheduled for June in nearby Kananaskis, Canada.
Bessent might offer a more conciliatory approach to discussions, as he is perceived as a moderate voice on tariffs within the Trump administration. Despite the tensions, there may still be common ground, especially concerning the Trump administration’s objective of addressing “global imbalances” in trade — primarily highlighting the U.S.’s significant trade deficits.
“The intentional policy choices by other countries have hollowed out America’s manufacturing sector and undermined our critical supply chains, putting our national and economic security at risk,” remarked Bessent during his remarks last month at the IMF and World Bank meetings.
Discussions surrounding the status of the U.S. dollar are anticipated during informal side conversations. Following Trump’s announcement of extensive tariffs, the dollar unexpectedly dropped in value, coupled with increased interest rates on Treasury bonds, indicating that international investors might have turned away from American assets amid growing doubts about the nation’s governance and economic resilience.
Steven Kamin, a senior fellow at the American Enterprise Institute and a former senior economist at the Federal Reserve, asserted, “In the hallways, they’re going to talk about nothing but tariffs and the dollar.”
Last year, during the meeting of G7 finance officials in Stresa, Italy, attendees reached a joint commitment to uphold a “strong commitment to a free, fair, and rules-based” global trading system. Whether the group can achieve a similar consensus this year remains uncertain.
Another pressing question on the table is whether the G7 nations can unify on enhancing sanctions against Russia. Recent announcements from the European Union and the U.K. focused on sanctions targeting Russian oil, aiming at the country’s “shadow fleet” of unregistered oil tankers that enable the funding of its war efforts in Ukraine.
Discussions to potentially reduce the price cap on Russian oil, set at $60 per barrel due to previous sanctions, are also on the agenda for the meetings occurring on Wednesday.
Although the Trump administration has voiced support for increased sanctions on Russian oil, it has not yet committed to the new restrictions being proposed. Trump’s recent conversations with both Russian President Vladimir Putin and Ukrainian leader Volodymyr Zelenskyy on ceasefire talks highlight the complexity of the situation, although specifics on such discussions remain scarce.
Additionally, Ukrainian Finance Minister Sergii Marchenko is in attendance at the G7 meetings, even though Ukraine is not a member of the group. Daleep Singh, chief global economist at PGIM Fixed Income and a former deputy national security adviser during the Biden administration, noted that the efficacy of sanctions on Russian oil could be pivotal in assessing G7 unity.
“If you’re looking for something to engender a just and lasting peace, oil sanctions are the place to look,” Singh asserted.
image source from：https://www.pbs.org/newshour/economy/trumps-tariffs-will-test-u-s-allies-at-g7-finance-ministers-summit
