Trade, Trump and tariffs hang over the G7 summit

In 1975, leaders of the world’s largest industrialized nations met in a 14th-century château southwest of Paris for an informal exchange of views. The summit took place as turmoil embroiled the global economy in the wake of the first oil shock. 

Fifty years later, leaders of what is now known as the Group of Seven or G7 will convene in Kananaskis in the Canadian Rockies this weekend for their latest annual gathering. 

Far from recreating the unity of the first summit, Canada’s new Prime Minister Mark Carney will be hard pressed to prevent a visible rupture in the group. 

It is easy to be skeptical about the value of these high-level meetings, where words usually exceed actions. US President Donald Trump’s decision to attend has lowered expectations even further. 

Not only did Trump have a rocky relationship with the G7 in his first term, but the broad-based tariffs he has imposed on every member of the group since January have cast a deep shadow over the gathering in Canada. 

Nevertheless, the G7, which is made up today of the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom, plus the European Union, still has substantial economic heft, representing over half of global gross domestic product. 

Economic growth

What this group of the world’s largest industrial democracies does can shape the global policy agenda. And the fact that leaders have continued to show up regularly at these summits for half a century suggests that there is still power in the forum. 

There are certainly plenty of consequential issues for leaders to discuss in Kananaskis. Global economic growth is slowing, largely because of the uncertainty created by Trump’s on-again-off-again tariffs. 

Just as their finance ministers did when they met in Banff in late May, G7 leaders will likely avoid any explicit reference to tariffs in their public statements. But Trump’s tool of choice will be a heated topic behind closed doors and in hallway huddles. 

G7 finance ministers danced around the issue in their communiqué by acknowledging concerns that “trade and economic uncertainty was high and weighing on global growth.” 

They stressed the need to address “unsustainable global macro imbalances,” which lie at the heart of the trade deficits to which Trump is so averse. References to uncertainty and imbalances could appear in whatever official statements emerge from Kananaskis.

But there is unlikely to be collective action to resolve the tariff disputes themselves. 

Geopolitical issues will also feature prominently. The joint statement of G7 foreign ministers following their meeting in Quebec in mid-March offers a preview of leaders’ discussions. Ukraine is at the top of the list. 

Foreign ministers issued a strong statement of support for Kyiv and said they had “discussed imposing further costs on Russia” if Moscow did not agree to a ceasefire.

Given Trump’s ongoing conversations with Russian President Vladimir Putin, the prospect of any meaningful new G7 action to promote a durable resolution of the three-year-old conflict is highly uncertain. 

Still, China is expected to feature prominently in the discussions, both explicitly and indirectly. As with G7 foreign ministers, leaders will probably express concern about tensions in the East and South China Seas and Beijing’s military build-up.

Critical technologies

They will likely reiterate longstanding calls for peace and stability across the Taiwan Strait, as well as a “free, open, prosperous, and secure Indo-Pacific.” Code for limiting China’s undue influence in the region. 

Although finance ministers did not mention China explicitly in their statement from Banff, they alluded to it in several ways. The first was in the context of economic security.

Ministers stressed the “need for a common understanding of how non-market policies and practices aggravate imbalances, contribute to overcapacity, and impact the economic security of other countries.” 

Look for G7 leaders to say more about other aspects of economic security outlined in their standalone statement at Hiroshima in 2023, including protecting critical technologies and building resilient supply chains, notably for critical minerals.

Finance ministers also implicitly criticized China for its non-transparent lending policies that add debt to vulnerable countries. This raises the question of how G7 leaders will talk about broader engagement with the developing world. 

On one hand, global development, especially in Africa, has been a central topic of discussions for decades and is a high priority for Canada and other members. 

On the other hand, the Trump administration has closed the US Agency for International Development and proposed severe cuts to funding for global health and other development initiatives. 

Trump is unlikely to have any patience for talks on gender equality, climate change, or other development-related topics that featured prominently in last year’s G7 communiqué from Italy. 

For all the important issues on the agenda at Kananaskis, as always, most media attention will focus on the dynamics among G7 leaders. 

One area of interest will be the performance of the four new members of the group –Germany’s Chancellor Friedrich Merz, Japan’s Prime Minister Ishiba Shigeru, the UK’s Prime Minister Keir Starmer, and Carney himself. 

Targeted statements

But, of course, all eyes will be on Trump. The last time he attended a G7 summit in Canada, in 2018, he famously left early, refused to sign the joint communiqué, and criticized then Prime Minister Justin Trudeau as “very dishonest and weak.” 

To avoid another such fiasco, Carney is unlikely to press for a joint communiqué but rather issue his own “chair’s summary” and seek agreement on a set of targeted statements on specific issues such as Ukraine and the Middle East. 

It is even possible that some of these could be “G7 minus one” statements if Trump refuses to sign on. 

Carney is also likely to minimize the time leaders spend together around the table, allowing space for bilateral meetings and interactions. The agenda for any group sessions will probably center on the relatively benign topics Carney laid out as his priorities.

They will probably include “protecting our communities and the world, building energy security and accelerating the digital transition, as well as securing the partnerships of the future.” Such an agenda would reduce the risk of fireworks.

There will also be one or more outreach sessions bringing leaders from significant non-G7 countries to the table. 

Confirmed guests include Ukraine’s President Volodymyr Zelenskyy, Australia’s Prime Minister Anthony Albanese, South Africa’s President Cyril Ramaphosa, Mexico’s President Claudia Sheinbaum, and South Korea’s new president, Lee Jae-myung. 

Continued strains in Canada-India ties raised early questions about whether an invitation would be extended to Prime Minister Narendra Modi, who has attended every G7 summit since 2019. In the end, the Indian leader was invited and will attend. 

Side meetings are always an important element of these high-level gatherings, but there will be intense interest in this year’s G7 bilaterals because of the heated state of trade relations in the group. 

Of particular interest will be expected talks between Trump and European Commission President Ursula von der Leyen and between Trump and Ishiba. Both the EU and Japan are hoping to reach trade deals – or at least a truce. 

Border security

The presence of Albanese and Modi has raised the prospect that two groupings –AUKUS (Australia, the UK, and the United States) and the Quad (Australia, India, Japan, and the United States) – could hold informal confabs on the margins. 

Trump, Carney, and Sheinbaum could also pull aside for a meeting of North American leaders on trade and border security. 

At their best, G7 summits serve three main purposes – solving global problems, setting an agenda for international action, and building cooperation. Given the visible seams in Western unity, this gathering in Canada might have a lower bar.

It could be judged a success merely if leaders stand in line and smile for the traditional “family photo.” 

Matthew P Goodman is director of the Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations and directs CFR’s RealEcon Initiative. 

This edited article was published by the Council on Foreign Relations under a Creative Commons license. Read the original here. 

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