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US says it's ready for any unintended trade war

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Following the G-20 meet on Tuesday, Mr Mnuchin says that although the US is not seeking a trade war over its steel and aluminium tariffs, it is 'not afraid of it'.

Buenos Aires

THE United States is not seeking a trade war over tariffs but does not fear one, US Treasury Secretary Steven Mnuchin said on Tuesday after a meeting of G-20 finance ministers.

A trade war "is not our goal, but we are not afraid of it", Mr Mnuchin said at the end of the two-day meeting in Buenos Aires, aimed at averting a crisis sparked by looming US tariffs on steel and aluminium. "We have to be prepared to act in the US interest to defend free and fair reciprocal trade. In doing that, there is always a risk. That's not our goal. But we are not afraid of it."

Mr Mnuchin was speaking after ministers agreed not to condemn the US move in the meeting's final statement, but instead spoke of "heightened economic and geopolitical tensions".

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"Downside risks persist and, over the medium term, challenges remain to raise growth and make it more inclusive," said the ministers from the most developed and emerging economies.

The final communique, approved three days before US trade tariffs on steel and aluminium go into effect, comes as the world's two biggest economies - the US and China - clash over trade rules, particularly overproduction, in which European and other US allies could sustain collateral damage.

"There is a desire to see China open its markets so we can participate in them the way they participate in ours, in a much more balanced and reciprocal trading relationship," the US Treasury chief said of the general view among his G-20 counterparts.

On the tariffs row, he added that his delegation had "very productive conversations" with G-20 allies. "We had a bunch of discussions about trade and tariffs, and those continue to be ongoing," said Mr Mnuchin.

"We sensed a willingness of the Americans to reduce tensions," a French ministry source said after a meeting on Monday between France's Finance Minister Bruno Le Maire and Mr Mnuchin.

Mr Le Maire was among several EU ministers to plead for an exemption from the US tariffs, saying the problem was due to China's overcapacity, not key allies in Europe. "The decision they want to take is not appropriate," he told reporters after the meeting.

Mr Mnuchin's veiled threat was echoed by EU Economic and Financial Commissioner Pierre Moscovici, with a statement carrying the same hint of steel in a velvet-gloved hand. "The EU does not want an escalation on trade, it does not want a trade war, but it is ready to react, even if our preferred option is dialogue," he said. "Our countermeasures are ready."

Ministers agreed to delay the search for a solution on the touchy subject of taxing the four American tech giants Amazon, Apple, Facebook and Google.

In their statement, the ministers pledged to "work together to seek a consensus-based solution by 2020" on the taxation of digital giants. They agreed to provide an update on the situation in 2019.

"This is a positive message - there was no shock at the meeting," said Pascal Saint-Amans, director of the Center For Tax Policy And Administration at the Organization For Economic Cooperation And Development.

On the eve of the meeting, Mr Mnuchin had sounded a clear warning that the US "firmly opposes" any new tax aimed at its big tech firms, despite a growing EU resolve to tackle the issue.

G-20 ministers sounded a note of caution on bitcoin and other cryptocurrencies, agreeing that they "lack the key attributes of sovereign currencies", and pointing out that "at some point, they could have financial stability implications".

Mr Mnuchin, speaking on Venezuela, which introduced its own cryptocurrency to counter US sanctions, said the US would consider additional sanctions against President Nicolas Maduro's socialist government. AFP

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