Global trade war dominates agenda for Group of Seven finance ministers meeting in Banff

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Finance ministers from Group of Seven industrialized countries gather in Banff on Tuesday as they seek to de-escalate a global trade war launched by Donald Trump while Washington tries to steer discussion to what it considers unfair commercial practices.

The three-day meeting in the Alberta resort town is a prelude to the June G7 summit in nearby Kananaskis where Canada will play host to Mr. Trump and other world leaders, including Ukrainian President Volodymyr Zelensky. He is looking for further support and more sanctions against Russia as well as help in rebuilding Ukraine as Mr. Trump tries to arrange a ceasefire in Moscow’s war on Kyiv.

The G7 includes Canada, the U.S., Japan, Germany, France, Britain and Italy. Ukraine’s Finance Minister Serhii Marchenko will join others at the Banff meeting this week as the EU readies a new package of sanctions on Russia.

Canada holds the G7 presidency this year and while the agenda for the meeting of finance ministers and central bank governors will include the global economy, economic resilience, Ukraine, financial crime and artificial intelligence, the underlying theme will be trying to contain U.S. protectionism or find workarounds that expand trade with other countries.

This will be the first full meeting of G7 finance ministers in more than half a year and the first with U.S. Treasury Secretary Scott Bessent in attendance.

“It gives a chance for all of the finance ministers to have very frank discussions and make their point, individually and collectively, to Scott Bessent about the costs the tariff war is imposing on Americans in the United States,” said John Kirton, director of the G7 Research Group at the University of Toronto.

Canada under new Prime Minister Mark Carney is trying to reduce its dependency on the United States and shift trade to European and Asian markets. Mr. Carney said during his weekend visit to Rome, where he met European leaders, including from German and Italy, on the sidelines of Pope Leo XIV’s inaugural mass, that critical minerals and energy and other materials that Canada produces in abundance will also be on the agenda. “Canada has what the world wants,” he said.

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Mr. Kirton said Canada needs to demonstrate to the Americans that it has real alternatives for trade: that it can deepen trade agreements with the European Union and with the countries of the Trans-Pacific Partnership.

G7 countries are all trying to strike trade deals with Washington to avoid tariffs imposed – but then paused – by Mr. Trump, which he argued were necessary to remedy unfair trading practices by allies, as well as by competitors such as China.

Britain was the first to clinch a deal and Mr. Bessent told NBC on Sunday that the White House was focused on its 18 most important trading relationships and that the timing of any trade deals would also depend on whether countries were negotiating in good faith.

Mr. Bessent wants to refocus discussions at Banff to addressing trade imbalances and non-market economic practices, a Treasury spokesperson told Reuters on Sunday. The White House under Mr. Trump considers trade deficits, where U.S. customers buy more from a foreign country than it buys from the United States, to equate to subsidies.

The spokesperson said Mr. Bessent also wanted to get the G7 back to basics and focused on addressing imbalances and non-market practices in both G7 and non-G7 countries.

This would include steps to counteract spillover effects from non-market practices into economies that follow market practices, the Treasury spokesperson said, without identifying any specific countries.

Mr. Bessent has consistently called out China’s state-driven non-market economic policies and subsidies for fuelling massive excess manufacturing capacity that is threatening jobs, companies and economies throughout the world.

The United States will likely find no opposition to its critique of China but it’s another question whether other countries would sign on to further retaliatory action against Beijing.

“There’s a great deal of agreement amongst G7 finance ministers, central bankers and their leaders that China is running, in a sense, the ultimate non-market economy, that it does use its exchange rate, its monetary policy, in order to protect its domestic economic fortunes,” Mr. Kirton said.

While trade tensions are unlikely to be resolved at this week’s meeting, the G7’s ability to promote shared economic and security interests will be tested.

“They’re all going to want to demonstrate that unity is still possible, even on a more limited range of issues than before Trump returned to the White House,” said Roland Paris, who served as a foreign policy adviser to former prime minister Justin Trudeau.

Mr. Paris said in an interview that the chances of reaching an agreement on climate-related issues is “very low,” but officials may be able to find common ground on counteracting China’s non-market practices and financial crimes.

As the U.S. diverges from its allies on various issues, the G7 has demonstrated its willingness to make compromises on policy positions to keep Washington onside on other priorities.

The Globe and Mail reported that at the G7 foreign ministers’ meeting in March, officials left out any mention of a two-state solution to the Israeli-Palestinian conflict from their final communiqué to get the United States to agree to language on Russia.

Mr. Kirton said the finance ministers’ meeting will set expectations for what the leaders will accomplish at their summit next month.

“I think that the critical issues at the forefront of the leaders’ agenda are almost exactly the same ones that the G7 finance ministers will focus on,” he said.

He said he expects fiscal and monetary policy to play a larger role in the ministerial discussions, which are happening just days after Moody’s downgraded the U.S.’s credit rating.

With a report from Reuters