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EU warns of recession from trade war ahead of G-7 Summit in France

Macron said his goal was "to convince all our partners that trade tensions are bad for everyone".

, ET Bureau|
Updated: Aug 24, 2019, 07.05 PM IST
We have to achieve some form of de-escalation, stabilise things, and avoid this trade war that is taking place all over," Macron said.
European Council President Donald Tusk on Saturday warned that "trade wars will lead to recession" ahead of arrival pf US President Donald Trump who have initiated tough trade measures against a host of nations.

In a press meet ahead of the G7 summit Tusk said that trade wars among the G7 members will lead to already weakened trust among them. “Trade deals and the reform of the World Trade Organization are better than trade wars,” Tusk said. “Trade wars will lead to a recession while trade deals will boost the economy.”

He recalled that last year's summit in Canada showed it is increasingly difficult for the countries to find common language. Trump and Canadian Prime Minister Justin Trudeau had differences over G-7 joint declaration.

Tusk said the summit will be a difficult test of unity and solidarity and he stated that any US imposed tariffs on France over its digital taxation plan will be responded in kind by the EU.

“There is still no certainty on whether the group will be able to find common solutions – and the global challenges are today really serious - or whether to focus on senseless disputes among each other,” Tusk regretted.

On Friday Trump threatened France with taxes on their wines as he headed to a G7 summit in Biarritz. He also increased existing and planned tariffs on a total of $550bn in Chinese products in retaliation for Beijing taking action against $75bn in American goods.

"Our tariffs are very good for us," Trump said. "China's paying for it."

"Our economy is doing great. We are having a little spat with China and we'll win it."

The prospect of a prolonged trade war between the world's two largest economies has cast a shadow over the G7 and other economies.

"Those are great American companies, and frankly, I don't want France going out and taxing our companies. Very unfair," Trump told reporters.

"And if they do that, we'll be taxing their wine or doing something else. We'll be taxing their wine like they have never seen before."

There is already friction between Trump and the Europeans, Canada and Japan over trade tariffs. USA and India also have differences over tariff and trade deficit. Trump and the Indian PM are expected to discuss when they meet here on Monday.

Discussions on economic growth have been scheduled - at the request of the White House.

Trump has reiterated his desire to recreate the G8 format with Russia. However, Tusk said "under no condition" can we agree with Mr Trump's proposal to bring Russia back into the group.

Tusk said the G7 leaders should make one more push to come together over Iran. “The rejection of the nuclear deal with Iran by the United States has not brought about any positive results,” Tusk said.
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