Trump Wins: G-20 Drops 'Anti-Protectionist, Free-Trade, & Climate-Change Funding' Pledge

Tyler Durden's picture

After delays and hours of discussions amid tensions over 'trade' comments between the United States and the rest of The G-20, it appears President Trump has 'won'. While China was "adamantly against" protectionism, the finance ministers end talks without renewing their long-standing commitment to free trade and rejection of protectionism after US opposition.

The world's financial leaders are unlikely to endorse free trade and reject protectionism in their communique on Saturday because they have been unable to find a wording that would suit a more protectionist United States, G20 officials said.

This would break with a decade-old tradition among the finance ministers and central bankers of the world's 20 top economies (G20), who over the years have repeatedly rejected protectionism and endorsed free trade.

But the new administration in the United States is considering trade measures to curb imports with a border tax and would not agree to repeat the formulations used by previous G20 communiques, clashing with China and Europe, the officials said.

"Unless there is a last minute miracle, there is no agreement on trade," one official, who declined to be named, told Reuters.  "This is not a good outcome of the meeting," a G20 delegate quoted Bundesbank President Jens Weidmann as saying.

In a partial face-saving move, as The FT details, G20 finance ministers meeting in the German resort town of Baden-Baden noted the importance of trade to the global economy, but dropped tougher language from last year that vowed to “resist all forms of protectionism”.

The new communique said: “We are working to strengthen the contribution of trade to our economies. We will strive to reduce excessive global imbalances, promote greater inclusiveness and fairness and reduce inequality in our pursuit of economic growth.”

 

The watered-down commitments on free trade reflected the anti-globalisation mood that Donald Trump has brought to Washington and came in the first G20 meetings between Steven Mnuchin, the new US Treasury Secretary, and his foreign counterparts.

US Treasury Secretary Mnuchin spoke to reporters after the meeting:

  • *MNUCHIN: LOOKING FORWARD TO WORKING CLOSELY W/ G-20 COLLEAGUES
  • *MNUCHIN: CONFIDENT U.S. CAN WORK CONSTRUCTIVELY WITH PARTNERS
  • *MNUCHIN: U.S. BELIEVES IN FREE, BALANCED TRADE
  • *MNUCHIN SAYS WILL LOOK AT TRADE SURPLUSES WITH VIEW TO CORRECT
  • *MNUCHIN SAYS MULTILATERAL AGREEMENTS HAVE VERY IMPORTANT PLACE
  • *MNUCHIN SAYS U.S. WANTS TO RE-EXAMINE TRADE DEALS INCL. NAFTA
  • *MNUCHIN: U.S. BELIEVES IN APPROPRIATE REGULATION
  • *MNUCHIN SAYS IMPORTANT BANKS CAN PROVIDE LIQUIDITY IN MARKETS

Reuters also points out another potential win for Trump as the communique will also drop a reference, used by the G20 last year, on the readiness to finance climate change as agreed in Paris in 2015 because of opposition from the United States and Saudi Arabia.

Trump has called global warming a "hoax" concocted by China to hurt U.S. industry and vowed to scrap the Paris climate accord aimed at curbing greenhouse gas emissions.

 

Trump's administration on Thursday proposed a 31 percent cut to the Environmental Protection Agency's budget as the White House seeks to eliminate climate change programs and trim initiatives to protect air and water quality.

 

Asked about climate change funding, Mick Mulvaney, Trump's budget director, said on Thursday, "We consider that to be a waste of money."

The G20 do agree, however, to show continuity in their foreign exchange policies, using phrases from the past on foreign exchange markets.

As we noted earlier, needless to say, such an acrimonous end to the weekend's summit would likely result in a surge in FX volatility when markets open for trading late on Sunday, reflecting the new state of global trade flux, in which the future of the US Dollar is completely unknown, and reflecting the emerging chaos over the future parameters of trade.
 

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otschelnik's picture

Productivity gains through the classical model of economic inputs labor+capital which spawned Luddism -when capital (machines) replaced labor, is now being replicated through the neoclassical model of inputs labor+capital+intelligence, when microprocessors are replacing managers and operators.  At the end of the 19th century 70% of the US population was occupied with mostly subsistence farming but machines changed that, now about 2% of the population is engaged in agriculture.

Labor always comes out on the short end. The transition has never been smooth, and looks like we are going to go through one of those periods now.  However pessimism isn't really warranted, if you believe in classical economics.  The new era will open new possibilities which we cannot fathom at this time will become the norm.  Hopefully our children will study more programming and less gender and feminism studies, it'll get them off to a better start. 

And thank you for your reasoned response to my snarky comment. 

Herdee's picture

Trump is pretty smart. Notice that he has the backing of the American military. Programs need tax dollars. It's called " American Dollars returning home". Hear the sucking sound? Socialism is afraid of free enterprise.

bh2's picture

Slowing the rate of predation by the global kleptocracy is a big step forward. 

NotPCenough's picture

What a Feel Good Article I got to read this morining with my Coffee... Winning sure does feel GREAT!!

 

NotPCenough's picture

What a Feel Good Article I got to read this morining with my Coffee... Winning sure does feel GREAT!!

 

Uranium Mountain's picture

Are you ready for price inflation because it's coming....

overmedicatedundersexed's picture

are you ready for higher paying jobs..fuck your inflation

TheLastTrump's picture

We've already had inflation. We already speak in terms of "tens of thousands" when we talk cars or houses.

 


Chris88's picture

Except all protectionism does is prop up companies and industries that cannot stand on their own two feet, meaning capital will flow to where it shouldn't be going.  Additionally, higher prices from subsidizing these losers means less disposable income to save/invest, raising the cost of capital for US businesses, making more and more projects fall short of the required after-tax ROI hurdle, crimping productive output, and in turn actually creating fewer jobs.  But hey why look at the 4th and 5th order effects of something like you would with minimum wage, just let the appeal to emotion cloud your judgment.

Paul Kersey's picture

Chris, you are 100% correct.

MuffDiver69's picture

Are you ready for trillion dollar trade deficits at current pace. Schmucks like you have to come up with real answers and not BS free trade..

TheLastTrump's picture

US positive news should be dollar positive which should be inflation negative.

 

Yuuuuuuuuge Biiiiiig Leeeeeeeague Biiiigly dollar positive news in NATO ponying up it's share. Others. Budget, cutting expenses etc.

mofreedom's picture

Non-US exporters currencies should depreciate to the point of the added import tax.

US exporters to compete with a higher dollar via a 0.00% tax.

Did HRC sell you to the Russians?

Rainman's picture

May we assume the G20 spying network will be on line in Germany as it was in London, 2009 ...??

https://www.theguardian.com/uk/2013/jun/16/gchq-intercepted-communications-g20-summits

small axe's picture

"...over the years have repeatedly rejected protectionism and endorsed free trade."

all this "free trade" was the bullet to the head of the US middle class

TheLastTrump's picture

quote marks are right

 

"free trade" my ass

 

more like a gangbang

 

people got paid and played

overmedicatedundersexed's picture

if you want to trade , you better have something I want to buy..

hot air climate change ..sells nothing I want. but gives me taxes like obuma care, put a gun to our heads and says..buy this insurance or else..

fuck that..freemen are fed up.

captain-nemo's picture

This is good news. Finally Trump shows these fuckers in the EU who's the boss.

pocomotion's picture

Tighter until the bow breakes then war will rage and Johnny has to fight...

stant's picture

Kek wins again

Dilluminati's picture

If the deal is you send your children to die for Old Europe and we pitch in 1% (and do nothing but complain about the USA) we got screwed on the deal.

It's the damn complaining I can't stand, lets call it history WWII and say nobody owes anyone squat.. 

But 1% in GDP to Nato?

I'm surprised these people can pull their shirts on they have such big hearts

I spend more than 1% each year on personal security.. what f0cking slugs

 

 

sudzee's picture

Trump forcing G20 members to admit a total failure of past policy to do anything to help mankind. Policy of political graft and fraud needs to end. Manipulation of currencies be western central baks needs to end. Germany should be forced to leave the euro behind and stop using the misery of 27 other country to their advantage. 

William Dorritt's picture

Who cares what Europeans think, they don't won guns.

MuffDiver69's picture

We have all the leverage. We have the market. President Trumps policies will lower gas prices,utility bills and regulation cuts will free up farmers and others that will affect prices of food...Damn right people can pay more for American made luxury items and learn to live like the wife and I did starting out...Screw globalism and the sheep who defend this slave labor crap.

William Dorritt's picture

Deporting 25-40 million Free Loaders

who consume all Govt Programs and pay into none, including free health care and food stamps, should help quite a bit too.

TheLastTrump's picture

My electricity bill has tripled in the last 10 years, some of it due to demand but not most.

 

 

PS- And they want to ADD A 20% CLIMATE CHANGE TAX ONTO THAT to be GIVEN TO THE U-FUCKING-N.

Ignorance is bliss's picture

Globalist free trade destroyed domestic workers and small producers by reallocating resources to poor nations that don't have environmental regulations and pay slave wages. It's always been immoral.

Chris88's picture

There's been no such thing as free trade, i'ts been government managed trade.  Those countries where the jobs went to don't require licenses to operate lemonade stands and don't have insane labor and environmental regulations.  Just because wages are lower doesn't make them "slave wages", it just means that it is a lower wage than you or most in the Western world would work for.  Hence why the job no longer exists here and never will, even with his idiot plan of high tariffs.  

Anopheles's picture

You are among the few that understand that companies didn't just "leave", that it has been government FORCING them out with tens of thousands of "feel good" regulations and the tremendous costs associated with those regulations.   Each individual regulation isn't a problem, it's the weight of all of them combined that's crippling. 

A great example is minimum wage laws.   The government is forcing companies to pay $15/hr to someone who's only worth $8/hr to the company.   What happens?  They fire all the unskilled and then pay $25/hr to someone who can operate and maintain the automated equipment that replaced all those $8/hr workers.   Or they move their operations, and jobs, to another country that doesn't have all those regulations.  

Chris88's picture

Tell that to the Bernie/Trump supporters, they still can't figure it out.  They think a 35% tariff is going to bring back their lever pulling unionized job.

John McElroy's picture

How much is a "slave wage"?  I hear the tern used frequently but it alwasy seemed somewhat oxymoronic.

Benjamin123's picture

Wages not even sufficient to feed a family. Just the minimum enough not to kill the worker.

shovelhead's picture

Yes.

Having kids without developing skill levels to feed them is a winning strategy.

TheLastTrump's picture

When you work full time but require govt assistance for essentials, that's a slave wage that some company is using to mine tax dollars by not paying their way.

 

Slave wages don't actually exist, a slave has no pay.

Ignorance is bliss's picture

I lived in Guatemala a long time ago. There was a Chinese clothing manufacturer that paid poorly and overworked the employees. One day the main Chinese boss was walking down the road and a car load of employees blew his brains out. I don't know what low wages are, but I know what happens when wages and conditions get too far out of wack.

Ignorance is bliss's picture

My wife is Venezuelan. She went back to Venezuela a year ago to get her passport refreshed. She was at a hair salon and the ladies were talking about sex for money. They all agreed that they wouldn't give blow jobs for less then $5. Most of the ladies were married with kids and did what they did to survive. I don't know what low wages are, but I know that if you send your wife out to prostitute for your daily bread, then the wages are probably too low.

Chris88's picture

It's an appeal to emotion from people that hate markets and competition.  

truthalwayswinsout's picture

Let me get this straight: The U.S. is going to do "Free Trade" just like everyone else has done to the U.S. for the past 25 years and everyone is getting upset????

They should be excited to know that now they are the world leaders and trendsetters: Imitation is the sincerest form of flattery.

Chris88's picture

Protectionism = subsidizing inefficiency, one of the mosr retarded anti-capitalist policies that appeals to the dumbest people of society.

Cycle's picture

The largest and longest running expansion of the US economy occurred in protected mode.

For the past 25 years, "free trade mode" has resulted in the stagnation of wages, and the gutting of the middle class in America.

The reason is that there is no free trade. You cannot have free trade when currencies float against each other and countries engage in currency-based mercantilist attacks on their trade partners. #fakeconomics a la Summers, Greenspan and Krugman, to name a few.

William Dorritt's picture

35% to 100% Tariffs on US made products from our "Partners" doesn't help

TheLastTrump's picture

They don't want to talk about the fact that the US is already being penalised so that other countries exports are boosted.

 

Several someones sold us the fuck out. Trump is trying to fix this so we can prosper.

 

Gotta get the illegals out and student loans GONE so American kids will work. Throw those fucking phones away too while you're at it.

Cycle's picture

Good point, since there are a lot of WTO exceptions which never seem to apply to the US.

The bloodletting occurred because money center banks in the US invested in production in Asia in the 1990's. Ergo, it was in their interest to have a strong dollar to shut off US-manufacturing, which for them had a lower ROI.  It was very convenient that the Rubinites and other strong dollar allies, all of whom hailed from money center banks, captured both the US Treasury and the Fed, under the mantra of "New Economy" and pushed the globalist agenda. Well, we got the "New Economy" and it does not seem to be working out.  Trump seems to really understand the importance of this issue, but he is fighting Moloch on Steroids and its evil spawn.

Chris88's picture

Who does that hurt the most?  Their own people, and if we follow the lead of 3rd world countries that do such idiotic things Americans will suffer, too.

Cycle's picture

1957 - GM entry level $2/hr + benefits  ~ 18/hr in 2017 $. Who was hurting?

Chris88's picture

Try to keep on track and discuss the issue at hand.  Protectionism raises the cost of living across the board and raises the cost of capital, along with inducing capital to flow where it shouldn't be going.  When you raise the cost of capital to subsidize inefficiency fewer projects clear the required ROI hurdle and are thus not financed, projects that employ more people and increase productive output, which lowers prices (lowers cost of living) across the board.

Chris88's picture

The longest running expansion of the US economy occurred without a central bank, income tax, and very few regulations, especially no labor and environmental regulations.  There were also no government managed trade agreements.  But yeah, screw those things, I'm sure a few tariffs were the reason for the industrial revolution.  Clown.