Germany and G20 push for free trade amid fears of global trade war

Germany’s finance minister defended open markets after a G20 meeting in Buenos Aires. Officials from other countries also warned against protectionism ahead of planned US tariffs on steel and aluminum.

Germany and other members of the G20 group of major economies warned against protectionism at a G20 meeting in the Argentine capital Buenos Aires on Monday, as US trading partners prepare for planned US tariffs on steel and aluminum.

“We must make sure that protectionism will not now define the global landscape, but that there will still be open markets,” German Finance Minister Olaf Scholz told reporters. He added that he expected the final communique to emphasize the importance of free trade.

The head of the German central bank, Jens Weidmann, said the “dominant opinion” during the meeting was that trade spats should be solved “within the existing rule-based trade system.”

He added that a trade war would harm global growth: “It is clear that such an escalation would only create losers in the end.”

US pushback

Officials from the EU, Japan and Latin American countries including Argentina and Brazil shared Germany’s concerns.

“The first risk is the risk of inward looking policies and protectionism,” European Commissioner for Economic and Financial Affairs Pierre Moscovici told reporters.

Japan’s central bank chief Haruhiko Kuroda said: “There is a solid understanding among the global community that free trade is important.”

US Treasury Secretary Steve Mnuchin dissented, saying the US could not sacrifice its own interests for the global trading system.

Trade war scare

Fears of a global trade war have intensified in recent days amid heavy criticism from Europe and China against planned US tariffs on steel and aluminum imports.

The measures — a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports — are set to enter force on Friday. Only Canada and Mexico have been granted exemptions.

But EU leaders have called on the US to exempt the bloc as well, with French Finance Minister Bruno Le Maire asking Mnuchin for an exemption during the G20 meeting in Buenos Aires.

“To tell you the bottom line, no one would understand if the EU, at the end of the day, is not globally exempt from this,” he said.

The EU has already warned it will retaliate if it is not exempted by slapping tariffs on US exports, including motorcycles and whisky.