G7 Summit in Kananaskis: Sideline Talks to Dominate Trade Policy Discussions

Strategic Insights -

As the G7 summit in Kananaskis, Alberta, gets underway, world leaders are preparing to navigate the complex terrain of U.S. President Donald Trump's trade policies, which have severely disrupted the global economy. While the official agenda focuses on security, critical-mineral supply chains, artificial intelligence, and private-sector investment in infrastructure, the real action is expected to take place on the sidelines, where leaders will engage in one-on-one meetings with Mr. Trump to discuss new economic arrangements and pressing trade issues.

Key Takeaways:

  • The U.S. has shown a clear preference for bilateral discussions, making it challenging for other countries to achieve a collective agreement on trade policies.
  • The Canadian government has outlined several priorities for the G7 meeting, including discussions on security, critical-mineral supply chains, artificial intelligence, and private-sector investment in infrastructure, but trade and tariffs are not on the agenda.
  • Experts do not expect big announcements or breakthroughs on trade issues during the summit, but instead see it as an opportunity for leaders to engage in conversations about the progress of trade talks and expectations.
  • The absence of a joint communiqué at the end of the meeting is likely an intentional strategy to avoid confrontation with the U.S. President.
  • The deadline for the three-month pause on reciprocal tariffs is approaching, and the European Union and Japan are at risk of facing 20-per-cent and 24-per-cent U.S. tariffs if deals are not struck in the coming weeks.
  • Prime Minister Justin Trudeau has been in discussions with Mr. Trump over the past month about a potential trade and security agreement, which could lower some U.S. tariffs on Canadian goods.
  • Experts are cautious about the prospects of a major Canada-U.S. announcement during the summit, but see the meeting as an opportunity to engage in conversations about trade progress and expectations.

Statistics:

  • The U.S. has imposed 24-per-cent tariffs on Japanese goods, and 20-per-cent tariffs on EU goods, as part of the reciprocal tariffs policy.
  • The Canadian government has avoided Mr. Trump's reciprocal tariffs and the baseline 10-per-cent tariff, but is still impacted by levies on steel, aluminum, automobiles, and other goods that don't meet the continental free-trade agreement's rules of origin.
  • The deadline for the three-month pause on reciprocal tariffs is April 1, 2023, following Mr. Trump's announcement in April of the reciprocal tariffs policy.

Sources:

  • "G7 summit in Alberta: Leaders will focus on trade on the sidelines," Globe and Mail, June 13, 2023
  • Interview with Everett Eissenstat, former U.S. trade official and partner at Squire Patton Boggs
  • Interview with Christopher Hernandez-Roy, senior fellow and deputy director of the Americas Program at the Center for Strategic and International Studies in Washington
  • Interview with Goldy Hyder, president and CEO of Business Council of Canada
  • Interview with Clifford Sosnow, chair of the International Trade and Investment Group at the law firm Fasken