G7 trade ministers were holding a second day of talks in Paris on Wednesday as the global economy faced growing pressure from US tariff threats, war in the Middle East and concerns over dependence on Chinese raw materials.
The meeting comes as President Donald Trump paused a US operation to escort ships through the Strait of Hormuz, one of the world’s most important oil shipping routes, during talks on a possible Iran agreement.
French shipping group CMA CGM said on Wednesday that one of its vessels had been targeted while transiting the Strait of Hormuz, wounding several crew members and damaging the ship.
The growing instability has added pressure to talks already focused on supply chains, industrial policy and economic security.
Ministers from Britain, Canada, France, Germany, Italy, Japan and the US are discussing four priorities set by France, which holds the rotating G7 presidency this year: industrial overcapacity, critical minerals, reform of the World Trade Organisation and cross-border e-commerce.
Separate talks were also expected on Trump’s threat to raise tariffs on European cars and trucks after accusing the European Union of failing to respect a deal reached last summer.
EU and US trade officials meet in Paris as tensions rise over Trump tariff threat
Tariff pressure
The US and EU agreed last year to cap US tariffs on European vehicles and car parts at 15 percent, below the 25 percent duties imposed on many other trading partners. EU lawmakers approved the agreement in March, although member states still need to ratify it.
France’s junior trade minister Nicolas Forissier said earlier in the week that Europeans would discuss Trump’s latest threat, “but not within the framework of the G7”.
US Trade Representative Jamieson Greer was expected to hold meetings in Paris with EU Trade Commissioner Maros Sefcovic and French Economy Minister Roland Lescure.
Washington views “trade policy primarily as domestic policy”, Greer said in a video address during a session hosted by France’s business community on Tuesday.
“The United States is taking action unilaterally, but also together with willing partners,” he said.
“We view the priorities that France is pursuing as G7 host this year as complementary to US efforts on trade.”
EU-US trade deal averts tariff hikes, but sparks unease in Europe
China concerns
Efforts to reduce dependence on China for critical minerals have emerged as one of the most sensitive issues in the talks.
The materials are used in products including electric vehicle batteries, computer chips, wind turbines and defence equipment.
France favours creating groups of countries that produce, process and use the minerals, with members committed to good practices.
An online meeting of G7 ministers was scheduled for Thursday to continue discussions ahead of the leaders’ summit in Evian in June.
“One of the projects we have in mind within the G7 is to ensure – much as the International Energy Agency was created in the 1970s when OPEC held a production monopoly – that we develop alternatives through international cooperation,” Lescure told reporters in Lacq, a town in southwestern France being developed as a rare-earth processing centre.
He said China had captured a huge share of the market through heavy investment and pricing policies that drove potential competitors out.
France is also planning to rebuild its own rare-earth and permanent magnet supply chain, from securing minerals abroad to refining and manufacturing.
EU leaders push to rescue European economy challenged by China and US
Trade rules
By 2030, France aims to produce enough rare-earth oxides to cover all European demand for heavy rare earths and around a quarter of demand for light rare earths.
The French government also plans to loosen access to state guarantees for strategic projects, extend green industrial investment tax credits until 2028 and direct more funding through existing investment schemes.
Trade ministers are also discussing the collapse in March of the latest WTO negotiations. The body’s role as a trade referee has been paralysed by the United States for years.
“The goal is for this organisation to be better suited to current challenges,” Forissier’s office said.
The final issue is the rise in small parcels entering countries through online shopping platforms, which have escaped customs duties and created unfair competition for local retailers.
The US suspended tariff exemptions last year for packages worth less than $800, while the EU plans to introduce a flat-rate customs duty this summer on parcels valued at under €150 euros.
The G7 leaders’ summit is scheduled to take place in Evian from 15-17 June.
(with newswires)
