G7 warns of China’s trade war risks

European finance ministers from the Group of Seven major industrialized nations on Friday called on their countries to line up and adopt a unified stance in the face of China’s “unfair” industrial policies and also warned of the risks of a trade war in the wake of US sanctions and increased tariffs against Beijing.

On the first day of the G7 finance ministers’ meeting in the northern Italian city of Stresa, the ministers of Germany, France and host Italy called for the formation of a common front against the growing strength of Chinese exports.

Last week, Washington unveiled a set of increased tariffs on Chinese imports including electric car batteries, computer chips and medical products, raising fears of Chinese countermeasures and thus reinforcing divisions on the global trade scene.

The United States is not calling on its partners to take similar actions, but Treasury Secretary Janet Yellen said that she wants the United States’ allies in the G7 – Japan, Germany, France, Britain, Italy and Canada – to show that they stand with Washington.

French Finance Minister Le Maire said it was important to avoid a trade war with Beijing, which remains an “economic partner of the eurozone”, but that the G7 needed to protect its industrial interests in the face of China’s “unfair trade practices”.

Germany’s export-reliant economy will have a lot to lose from escalating trade tensions, and Finance Minister Christian Lindner told reporters: “Trade wars are about losing, you can’t win them.”

However, Italian Economy Minister Giancarlo Giorgetti, who chairs the Stresa meeting while Rome holds the G7 presidency this year, said it may only be a matter of time before the EU follows the US on tariffs. “The United States has taken very difficult decisions and perhaps Europe should consider whether it will do the same,” he told Italian state RAI television on Friday.

With the risk that US tariffs could increase Chinese exports to Europe, Giorgetti said it was essential that the G7 remained united and that European countries did not start competing with each other.

The United States’ pursuit of a loan for Ukraine, backed by future income from about $300 billion in frozen Russian assets, is another major topic of the G7 meeting that ends on Saturday, but it has become clear that no difficult details will be revealed at the meeting hosted by the Italian city of Stresa.

The ministers will be joined on Saturday by Ukrainian Finance Minister Serhiy Marchenko, whose war-torn country is struggling to contain the Russian offensive in the north and east.