The growing international isolation of the United States under President Donald Trump was starkly apparent last Friday as the leaders of major world economies mounted a nearly united opposition front against Washington on issues ranging from climate to free trade.

At a gathering of the Group of 20 world economic powers there were tough clashes with the United States and even talk of a possible transatlantic trade war.

The tensions were a measure of Trump’s sharp break with previous US policies. They were also a warning signal of Washington’s diminished clout, as the leaders of the other nations who gathered in Hamburg mulled whether to fix their signatures to statements that would exclude Trump or to find some sort of compromise. Two European officials said they were leaning toward a united front against Washington.

German Chancellor Angela Merkel, who faced the difficult job of bridging the differences, made little attempt to paper over the disagreements after the first day of meetings. “The discussions are very difficult. I don’t want to talk around that,” Merkel said.

She described the view of most participants that ‘we need free but also fair trade,’ a rejection of Trump’s scepticism about the value of sweeping free-trade agreements. And she predicted that the lower-level officials charged with negotiating a final statement deep into the night “had a lot of work ahead of them.”

Some of the clearest divides had to do with climate change after Trump’s decision to pull the United States from the Paris climate accord. There were sharp warnings about US steel policy as Trump mulls restrictions on imports.

In one of the most consequential decisions of his young administration, Trump could within days impose the restrictions on steel, a move that could affect trade with more than a dozen major countries.

“We will respond with countermeasures if need be, hoping that this is not actually necessary,” European Commi­ssion President Jean-Claude Juncker told reporters, adding figuratively: “We are prepared to take up arms if need be.”

Juncker warned that Europe would respond in days, not months, if Trump announces the restrictions.

The comments made for a remarkable display of disharmony as the gathering got underway. They also were a reflection of how European officials not only do not fear Trump but also see much to gain from opposing him. Trump is deeply unpopular in Europe, and politicians here can get a boost when they emphasise their differences.

Commerce Secretary Wilbur Ross has nearly finished a multi-month review of US steel imports, and he has said that the large amount of steel imported by the United States puts national security at risk because it has weakened the domestic steel industry. The White House is considering using this rationale to impose new restrictions, either by imposing tariffs or quotas, or a combination of the two.

Ahead of the summit, the White House was close to making a decision, but top Trump administration advisers slowed the process down at the last minute, persuading Trump to meet with other world leaders at the G-20 before deciding how to proceed.

The Trump administration has blamed China for what it says is a ‘global overcapacity’ of steel, essentially arguing that China’s government is subsidising its steel industry and allowing producers to create and export so much steel that it drives down prices and makes it difficult for US producers to compete.

But any US restriction on steel imports would have a relatively muted effect on China and would hit other countries much harder.

The largest exporters of steel to the United States are Canada, Brazil, South Korea, Mexico and Turkey, according to the IHS Global Trade Atlas. Germany also has a large steel industry, and German officials have been concerned about what a unilateral move to impose restrictions on steel imports to the United States might mean.

US negotiators were pressing their international counterparts on what they described as a global glut of steel production in the hopes that they can reach an agreement by Saturday on how to curb it, a US official said. The official said the issue was consuming significant time.

Other countries have also stood in opposition to Trump’s drive to erect trade barriers. When there is protectionism, “the entire international economy shrinks,” Japanese Foreign Ministry spokesman Norio Maruyama told reporters.

Japanese Prime Minister Shinzo Abe told leaders that all countries in the global economy must abide by “free and fair rules, and these rules need to be maintained at the high level, and need to be respected,” Maruyama said.

The EU has pointed proudly at a wide-ranging trade deal with Japan, concluded last Thursday, as a retort to Trump’s protectionist inclinations. Juncker said Europe expects to increase its exports to Japan by a third after trade barriers drop away.

—The Washington Post’s Isaac Stanley-Becker contributed to this report.
—The Washington Post Service

Published in Dawn, The Business and Finance Weekly, July 10th, 2017