Trump Persuades his G7 Allies that China Must Trade Fairly

Matt Snape

The current G7 summit is likely to be one of the most divisive gatherings of the world’s most powerful leaders so far. The two issues that are likely to divide the G7 leaders at this weekend’s Biarritz gathering are Iran and the US-China trade war. However, this is also an opportunity for the globe’s seven strongest nations to reach an agreement on these matters before they continue to impact upon global stability. The US President needs to justify his approaches towards China and Iran to his allies.

Trump’s Chinese tariffs have divided, as opposed to united, America’s allies. He has adopted a position on this crisis that has been unorthodox for US presidents since the 1930s. Politico reports that he has just increased existing tariffs on $250 billion worth of Chinese goods from 25 to 30 per cent. The other G7 leaders need to realise that the current President is using these tariffs as a stick to ensure that the US and China are equal trading partners.

The Guardian suggests that the reason why the President is applying pressure to the Chinese is because he is trying to narrow the trade deficit between these two respective countries. Since he campaigned to become the US President, Trump has complained that because China buys fewer goods from the US than they purchase from China, this has created a $419.5 billion gap since 2018. He has also accused Beijing of stealing American companies’ intellectual property and called for Chinese President Xi Jinping to alter the rules. Therefore, it is understandable why the G7 is a chance for the President to argue his case for tariffs, but he must persuade his allies to support him instead of alienating them, as Chinese tariffs affect the other G7 members too.

Forbes’ Kenneth Rapoza highlights that the percentage of businesses leaving China surveyed by quality control and supply chain auditor QIMA shows that 67 per cent of those companies came from the EU. He argues that even though the EU has not slapped its own tariffs on Chinese goods, they are relocating to enter new markets like Vietnam to reduce their dependence upon Chinese manufacturing. Since 2013, the European Commission has worked on an Investment Agreement with China to ensure both sides are trading fairly, but a source close to the South Morning China Post told the publication the US-China trade war has delayed all progress towards an EU-China trade agreement due to be signed in 2020.

Fellow G7 members Canada and Japan have a significant trade imbalance with China. Canadian imports have been worth CA$44.235 billion more to the Chinese than the value of Canadian exports to China since 2016. Nikkei Asian Review reports that Japan’s trade deficit with China is worth 3.58 trillion yen as of April this year. There is more that unites than divides all the G7 countries in ensuring the Chinese trade fairly, and that is why this weekend’s G7 summit should be a moment whereby they should all agree on the US’s strategy in ensuring that they do.

The G7 is Trump’s opportunity to remind his fellow leaders that a lack of market access and intellectual property protection are the fundamental barriers to trading fairly with China. These are concerns that former British Prime Minister Theresa May has shared with the US President in the past, and they should be what unites the world’s seven most powerful leaders behind ensuring that the Chinese play fair. But until the President makes a more convincing case as to why his tariffs are necessary to ensure all Western nations can trade fairly with China, this G7 summit will be a wasted opportunity for him to prioritise long-term trade over short-term protectionism.