Amid threats of imminent tariffs on metals and auto imports, escalating trade tensions between Europe and the United States were casting a shadow over a meeting of finance ministers from the world's top economies.
Long a bastion of multilateralism, the Group of Seven ministerial in a Canadian mountain resort will serve as the latest battleground for the discord now at the heart of the global economy.
As the US engages in a multi-front trade battle, with allies and adversaries alike, US Commerce Secretary Wilbur Ross on Wednesday rejected calls to extend exemptions on punishing import tariffs on steel and aluminum and warned that duties for massive US imports of automobiles were on the horizon.
This means the metals tariffs would take effect on Friday, the second day of the G7 meeting as frustration mounts in Europe, the single-largest source of US steel imports.
The Wall Street Journal reported on Wednesday that Washington would allow the EU exemption to expire, after weeks of talks failed to yield a compromise, such as a quota arrangement.
The harsh duties imposed in March to combat global overcapacity of the metals and boost domestic production, were only one part of a dizzying pace of developments, coinciding with a political crisis in Italy, which this week has roiled markets fearful for the future of the euro and bringing turmoil to the European Union, the G7's largest economic bloc.
- New G7 agenda -US Treasury Secretary Steven Mnuchin is due to hold meetings with his European counterparts to discuss President Donald Trump's confrontational trade agenda, officials said.
But Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics, told AFP that the agenda Canada, the current G7 chair, set for the meeting -- which included uncontroversial themes such as inclusive development and innovation in finance -- would be swept aside amid raw relations between America and its traditional allies.
"Hopefully they can agree to keep talking about these issues, although that is unlikely," he said, adding that Trump's recent actions proved to US allies that Washington would not de-escalate the dispute.
"I think the only thing you can hope for is no further harm."
In recent weeks, Trump has repeatedly switched course on key foreign policy and trade issues, first imposing then easing sanctions on Chinese telecoms equipment firm ZTE, and declaring a "hold" on a looming trade war with Beijing but then announcing he would press ahead with $50 billion in tariffs on China's tech sector.
Last week, the administration also launched a national security-based investigation that could result in stinging tariffs on the hundreds of billions of autos the US imports annually, just as it has for the smaller aluminum and steel industries.
And Ross also vetoed a traditional joint statement at an annual economic meeting in Paris this week which denounced protectionism, further angering US allies.
- About faces hinder consensus -Relations among G7 nations represent particularly high stakes as they account for more than 60 percent of global GDP.
And the sectors where Trump has chosen to wage his battles are key to trade in the economic bloc.
More than 60 percent of US auto imports -- an industry that closely binds US and Canadian manufacturing -- come from G7 countries, as well as more than 50 percent of aluminum imports and nearly 36 percent of steel.
Stephanie Segal, deputy director of the Simon Chair in political economy at the Center for Strategic and International Studies, said Washington's many about-faces meant consensus in the near-term was an increasingly dim prospect.
"It doesn't feel particularly constructive to me and I have to believe that the end game is not to create market instability, which is precisely what something like this does," she told AFP.
The Italian crisis, she said, demonstrated that there already were pressing matters facing the G7 even without the man-made ones now dominating the trans-Atlantic conversation.
"It's an opportunity to focus the mind on the fact that there are plenty of real crises out there, that creating a crises with a trade war on-off and antagonizing allies is probably not where we should be spending our energy."
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