Economy

Trump’s odd economic vision could make for an interesting G7

In Trumponomics, importing is losing – hence German car makers are in his sights

Angela Merkel and Donald Trump before talks at the G7 summit in Sicily. Photograph: Guido Bergmann/Courtesy of Bundesregierung/Handout

Sat May 27 2017 - 05:16

Meetings of the Group of Seven leading industrialised nations have, for years, been orchestrated events, with postsummit communiqués more or less agreed in advance between the so-called sherpas, senior officials who meet beforehand. But with President Donald Trump, everything has changed. The G7 is meeting in Sicily this weekend with large parts of the concluding text still blank, not least the section on trade.

Spice has been added by President Trump's comments on Germany. He reportedly said during a meeting with European Commission president Jean-Claude Juncker and European Council president Donald Tusk on Thursday that Germany was "bad, very bad" for exporting so many cars manufactured there to the US.

Der Spiegel quoted him as saying : "Look at the millions of cars they sell in the US. Terrible. We'll stop it. "

Many of the big German players already have manufacturing plants in the US, but it seems the president wants them to manufacture more in the US .

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All this is part of Trump’s odd economic vision, which minimises the benefits of free trade and instead takes the view that there must be winners and losers. In this worldview, importing is “losing” , in contravention of the traditional economic doctrine.

Nobody is now clear how Trump will play the trade issue at the summit.Will he sign up to a statement that favours free trade, overseen by the World Trade Organisation? Nobody knows – and part of the issue is that the new president has yet to fill many of the key jobs in his administration. As a result, the normal official contacts are simply not taking place.

Gary Cohn, Trump's economic adviser, expects "very robust discussions" on trade around the G7 table. There may also be a row on commitments made by the Obama administration on climate change, which Trump feels hurt American business.

Unlike the usual choreographed G7, this one could actually be interesting.

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