By David Lawder, promised Mukherjee and Julia Payne

Washington/Banff (Reuters) – The Ministers of Finance and Governors of the Central Banks of the Group of Seven (G7) meet this week in the Banff seaside resort, in Canada, to discuss in particular economic security and cooperation in artificial intelligence with the issue of American customs duties in the background.

The G7 members will also endeavor to show unity, while the American secretary of the Treasury, Scott Bessent, must join the meetings which stand from Tuesday to Thursday. The question of customs duties will therefore be at the center of discussions.

According to G7 officials and experts, the challenge is to avoid the fracture of the Western economic alliance, even if this implies less specific language and agreed actions.

Japan, Germany, France, Italy and Canada are all threatened by a potential doubling of “reciprocal” customs duties imposed by their partner – the United States – which could reach 20% or more at the beginning of July.

Great Britain has negotiated a trade agreement with the United States at the beginning of the month, fixing customs duties at 10% on most products.

“No one expects the United States to declare that the G7 and other partners will benefit from a more favorable special regime,” said Charles Lichfield, deputy director of the Geoeconomics Center of Atlantic Council in Washington.

However, it notes that financial officials will probably try to remind of Scott Bessent that they are the Allies of the United States, and that it is difficult for them to meet the requirements of Washington as for the trade war with China, being themselves subject to customs duties.

A spokesperson for the US Treasury said on Sunday that Scott Bessent would try to bring the G7 back to the essentials and to focus on the treatment of imbalances and non-commercial practices in member and non-member countries of the G7 “.

Scott Bessent, a former hedge fund manager, has continued to call backwards in the face of the Chinese economic model focused on exports that has resulted in production overcapacity and an influx of subsidized products in market economies.

During bilateral meetings with Scott Bessent, some ministers should advance their own negotiations with a view to reducing customs duties imposed by Donald Trump.

The US Secretary of the Treasury heads in particular negotiations with Japan, described by administration officials as at an advanced stage.

Scott Bessent said on Sunday that countries that did not negotiate “in good faith” would once again be subject to higher American customs duties, namely 24% in the case of Japan.

A delicate meeting

Despite disagreements on customs duties, G7 representatives, in particular those in Canada, host countries, seem determined to agree on a joint declaration at the end of the financial meeting, which will open the way to the top of G7 leaders in June.

G7 government sources to the fact that financial negotiations said that a press release was already ready and that Canada was trying to reach a consensus to show that the G7 countries were united on a whole series of questions.

The Ukrainian Minister of Finance, Serhi Martchenko, will also be present, while the European Union is preparing a new sanctions train to increase pressure on Moscow.

According to Charles Lichfield, after the failure of the negotiations between Russians and Ukrainians on Friday in Istanbul, Scott Bessent and the other G7 ministers could be more likely to agree to fill pressure on Russia, without committing to take specific measures.

Support for the International Monetary Fund (IMF) and the World Bank should also be subject to common ground, Scott Bessent having reaffirmed the support of the United States to these institutions in April.

The way in which the G7 will describe the economic uncertainty and the slowdown in investments caused by American customs duties, without explicitly blaming Washington’s policies, should also be the subject of debates during negotiations.

“My crystal ball is so troubled that I do not see the future very well,” said Suzanne Clark, director general of the United States Chamber of Commerce, during a conference bringing together business leaders from the G7 countries, held in Ottawa.

“I think we have to promote the future (…) a subject on which the business circles around the world can share the values ​​of democracy and the rule of law, entrepreneurship and the opening of markets,” she added.

(Makiko Yamazaki report, Julia Payne, David Lawder and Promit Mukherjee; Etienne Breban, edited by Kate Entringer)

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