Group of 20 finance leaders on Thursday focused on free trade in their meeting in Washington amid fears that the spread of protectionism following the introduction of new U.S. tariffs will hurt prospects for global economic growth.
The multilateral forum kicked off its two-day gathering in the wake of new tariffs on steel and aluminum announced by U.S. President Donald Trump that prompted retaliation from China and sparked fears of an all-out trade war.
Japanese Finance Minister Taro Aso said he told his counterparts that there would be no winners in a race to raise barriers to goods from abroad, and that such moves would roil financial markets.
“No country will benefit from adopting inward-looking policies. If protectionism spreads, there will be less wealth to go around for everyone,” he said at a press conference.
The International Monetary Fund said this week that the world economy is set to expand 3.9 percent year-on-year both in 2018 and 2019, picking up from 3.8 percent growth logged last year.
But it also warned of downside risks, including tighter financial conditions, geopolitical flashpoints and “a shift toward inward-looking policies that harm international trade.”
Bank of Japan Governor Haruhiko Kuroda told reporters before the meeting that Tokyo will maintain its stance that the erecting of trade barriers is a threat to economic growth.
“The global economy has grown thus far on the back of progress in free trade. We have to be mindful of the risk that protectionism could hit us hard,” he said.
Takatoshi Kato, a former Japanese bureaucrat now at the think tank Japan Center for International Finance, said the G-20 finance ministers and central bank chiefs will likely focus on convincing the United States of the importance of fair and open trade at the meeting.
“It’s imperative that they reaffirm how much the global economy has benefitted from free trade, and ensure that the multilateral frameworks currently in place are not undermined,” said Kato, Japan’s former top currency diplomat.
The G-20 will also likely discuss currency moves, possibly reaffirming an agreement to refrain from intentionally weakening their respective currencies to gain a trade advantage.
Trump earlier this week accused some countries of doing just that, tweeting, “Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!”
Aso hopes to assure his U.S. counterpart, Treasury Secretary Steven Mnuchin, that Japan is not looking to weaken the yen to boost the competitiveness of its exports. The two are scheduled to meet Friday on the sidelines of the G-20 meeting.
The G-20, which is chaired by Argentina this year, will also likely examine the effects that the wind-down of monetary stimulus in the United States and Europe will have on the global economy.
Meanwhile, geopolitical concerns remain, including the Syrian civil war and North Korea, whose leader Kim Jong Un has made diplomatic waves by prompting Trump to agree to hold a historic summit.
The G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.