G7 finance leaders try to downplay tariff disputes, find consensus

Participants said the G7 finance ministers and central bank governors were striving to issue a joint communique covering non-tariff issues, including support for Ukraine, the threat from non-market economic policies of countries including China, and combating financial crimes and drug trafficking.

At the meeting in Banff, Alberta, the finance leaders want to avoid a G7 fracturing similar to the last time Canada hosted the group in 2018 during Trump's first term, when his initial steel and aluminum tariffs made a joint statement impossible.

That meeting, described as the "G6 plus one," ended with Canada, Japan, Germany, France, Britain and Italy expressing "unanimous concern and disappointment" over Trump's tariffs.

Trump's tariffs are far more extensive this time, but G7 sources said there was an effort to find compromise with Treasury Secretary Scott Bessent.

"Italy continues to work so that the final compromise communique can be reached. A step we consider crucial," Italian Economy and Finance Minister Giancarlo Giorgetti said in a social media post.

Other ministers were more willing to live without a joint statement as long as the group reached a better understanding on trade imbalances.

"This G7 meeting allowed us to progress toward a better alignment on the support of Ukraine, on reducing global imbalances and on growth policies," said French Finance Minister Eric Lombard, who has a bilateral meeting set with Bessent. "And making progress is what matters ultimately. It's not just a question of agreeing on a statement today for the sake of it."

Ukraine discord 

But G7 delegation sources said it remained unclear whether the leaders could agree on joint communique language. One European source said, for example, that U.S. officials wanted to delete language describing Russia's attack on Ukraine as "illegal" from the draft.

Giorgetti said that Italy is pushing a proposal to bar countries that have done business in support of Russia's military effort from being part of Ukraine's reconstruction. The idea echoes what Bessent said last month that "no one who financed or supplied the Russian attack machine will be eligible for funds earmarked for Ukraine’s reconstruction."

China has been key in helping Russia circumvent Western sanctions and has served as a conduit of high-tech and battlefield goods such as drone components.

Delegates were discussing a possible lowering of the $60-a-barrel G7 price cap on Russian crude oil.

"We expect a thorny discussion on the price cap," one of the officials said.

The EU is pushing to lower the price level as it works on an 18th package of sanctions against Russia aimed at Russian energy and the financing of sanctions circumvention.

"There is no agreement yet on the communique but it’s fundamental that we get this communique. It would be serious if not agreed," a European official said. "At the end of the day, we are only seven countries."

Calming influence

A second European official said Bessent's participation in the meeting and efforts to try to find common ground provided some comfort to the group, describing him as "flexible."

"At the dinner last night, Bessent was very open and not rigid. He talked about working for a solution," the official added.

A U.S. Treasury spokesperson declined to comment on the G7 deliberations.

A U.S. source briefed on Bessent's positions said on Monday that Washington would not agree to a joint statement unless it served U.S. priorities, which include stronger G7 steps to combat non-market practices such as China's subsidies that have led to excess manufacturing capacity.

"The message we're passing on to Bessent is that tariffs are not the correct response to dealing with global imbalances," another European official said.

At the same time, Bessent was holding bilateral meetings with G7 counterparts, agreeing with Japanese Finance Minister Katsunobu Kato that the current dollar-yen exchange rate reflects fundamentals, according to a U.S. Treasury statement that added they did not discuss specific currency levels.

Japan is seeking to negotiate a tariff-reducing trade deal with the U.S.

Bessent also was meeting with France's Lombard and Canadian Finance Minister Francois-Philippe Champagne on Wednesday after a first meeting with Germany's new Finance Minister Lars Klingbeil on Wednesday.

A German source at the G7 meeting described the discussion as an open and constructive exchange that lasted longer than planned, and the two men agreed to meet again in Washington after Bessent extended an invitation.

Japan, Germany, France and Italy all face a potential doubling of U.S. duties to 20% or more in early July. Britain negotiated a limited trade deal that leaves it saddled with 10% U.S. tariffs on most goods, and host Canada is still struggling with Trump's separate 25% duty on many exports.