A trade war "is not our goal, but we are not afraid of it," US Treasury Secretary Steven Mnuchin said at the end of the two-day G20 meeting in Buenos Aires aimed at averting a crisis sparked by looming US tariffs on steel and aluminum.

US Treasury Secretary Steven Mnuchin speaks during a news conference at the G20 Meeting of Finance Ministers in Buenos Aires, Argentina on March 20, 2018
US Treasury Secretary Steven Mnuchin speaks during a news conference at the G20 Meeting of Finance Ministers in Buenos Aires, Argentina on March 20, 2018 (Reuters)

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 G20 finance ministers.

A trade war "is not our goal, but we are not afraid of it," 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 aluminum.

"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," he said.

"That's not our goal. But we are not afraid of it."

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."

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

Germany's Finance Minister Olaf Scholz (C, bottom) sits alongside other finance ministers and central banks governors as they gather for the official photo at the G20 Meeting of Finance Ministers in Buenos Aires, Argentina on March 19, 2018.
Germany's Finance Minister Olaf Scholz (C, bottom) sits alongside other finance ministers and central banks governors as they gather for the official photo at the G20 Meeting of Finance Ministers in Buenos Aires, Argentina on March 19, 2018. (Reuters)

Clash over trade rules

The final communique, approved three days before US trade tariffs on steel and aluminum 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 their markets so we can participate in their markets they 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 G20 counterparts.

On the tariffs row, he added that his delegation had "very productive conversations" with G20 allies. "We had a bunch of discussions about trade and tariffs and those continue to be ongoing," Mnuchin said.

"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 Mnuchin.

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," Le Marie told reporters after the meeting.

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."

India criticises "unilateral trade actions" 

Indian Trade Minister Suresh Prabhu expressed concern on Tuesday about the harm to the World Trade Organisation (WTO) posed by unilateral trade actions, a pointed reference to US import tariffs that have caused a global outcry.

Delivering concluding remarks after the WTO's  meeting in New Delhi, Prabhu did not refer to the US by name.

Calling for a united front to respond to the US tariffs, WTO Director General Roberto Azevedo also said the recent unilateral trade measures have the potential to escalate tensions.

Working on consensus over tech 

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, 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.

Moscovici is due to present the EU Commission's proposals in Brussels on Wednesday. He had sought to reassure his US counterparts in Buenos Aires, underlining that the EU measures "are a response to a situation, and are not anti-American measures."

G20 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."

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.

Source: TRTWorld and agencies