US tariffs make China trade issues more difficult to resolve: EU

[WHISTLER, British Columbia] The United States is making trade concerns related to China more difficult to deal with when Washington ignores World Trade Organisation rules in the case of steel and aluminum tariffs, a senior European Union official said on Friday.

Speaking on the sidelines of a meeting of finance ministers and central bankers of the Group of Seven - the world's seven leading economies - European Commission Vice-President Valdis Dombrovskis told Reuters such an approach made it tougher to bring China in line.

"The problem is that by taking that kind of unilateral action the US is undermining the principle of multilateralism in international trade, so it becomes more difficult to deal with other concerns - like trade and market access practices in China," Mr Dombrovskis said in an interview.

The US has bypassed WTO procedures and imposed tariffs on imported steel and aluminum from Friday, hitting Canada, Mexico and the European Union, even though the steel and aluminum over-capacity stems mainly from China.

Washington cited national security reasons for the tariffs.

He said G7 officials expressed concern to US Treasury Secretary Steven Mnuchin during the session on trade that the US tariffs posed a risk to global economic growth.

"Trade was discussed in the G7 in the context of risks to global economic growth and it was highlighted by quite a number of participants," Mr Dombrovskis said.

Asked if the United States was isolated on the issue of tariffs in the G7 talks, Mr Dombrovskis said: "Indeed. It is a unilateral position and also other jurisdictions are concerned. The US has also now started a consultation on potential new trade measures concerning cars and car parts. This is very much a matter of concern and was also part of the discussions."

Fears of a global trade war are overshadowing the G7 talks in the Canadian resort town of Whistler, as Washington's allies vow to push back against the US decision on tariffs.

Like Canada and Mexico, the European Union has prepared its own list of retaliatory measures against the United States worth an estimated 2.8 billion euros (S$4.36 billion). Mr Dombrovskis reiterated the EU position during the G7 meeting.

These include products the EU may subject to tariffs from rice to orange juice, cosmetics, motorcycles, motor boats to stainless steel sinks. It also includes many metals products for use in construction and industry.

When asked whether a trade war has already started, Mr Dombrovskis said: "That is certainly not the vocabulary we are using, we keep our communications channels open... we need to push for a solution on this particular issue."

Some officials said they expected the issue of tariffs to be addressed directly by G7 leaders at their summit in the Canadian town of Charlevoix next week.

REUTERS