US tariffs on China and Russian frozen assets will dominate the G7 meeting in Stresa

Ministero dell Economia e delle Finanze
Minister Giancarlo Giorgetti in the Eurogroup of May 13.

The upcoming Group of Seven (G7) meeting in Stresa, Italy, carries significant implications for global trade. The conference, scheduled for next week, will address the potential risk of fragmentation in international trade following US President Joe Biden’s recent imposition of high tariffs against China. Additionally, the meeting will discuss the possible use of Russian-frozen assets for Ukraine.

Biden’s move, which increased tariffs on several Chinese imports, including steel and aluminium, semiconductors, electric vehicles (EVs), solar panels, and medical products, has sparked concerns about the future of international trade.

“I just imposed a series of tariffs on goods made in China: 25% on steel and aluminium, 50% on semiconductors, 100% on EVs, And 50% on solar panels. China is determined to dominate these industries. I’m determined to ensure America leads the world in them,” Joe Biden posted today on the platform X.

Italian Economy Minister Giancarlo Giorgetti, who will host the Stresa meeting as Italy holds the rotating Presidency of the G7, said the meeting on May 24-25 among the G7 finance ministers in the northern Italian town of Stresa will reflect on the “fragmentation of global trade, with the latest moves by the American government which has shown its cards with hard measures against China,” said the Italian Financial Minister

However, a day before, on 13 May, during the Eurogroup meeting, before Biden’s decision, the G7 ministerial agenda for the Stresa meeting was vaster and the ministers more relaxed. 

Minister Giorgetti told his colleagues at the Eurogroup that the G7 meeting in Stresa would cover various topics, reflecting the diverse challenges and opportunities in the global economy. These include discussions on the global economy and fragmentation, financial sector issues, international taxation, and the green agenda. The meeting would also focus on the impact of artificial intelligence on the public sector and macroeconomic performance, with this theme being a vital focus of the Italian Presidency.

However, the ministers will now focus on the trade relations with China.   

Last year, Italian Prime Minister Giorgia Meloni withdrew Italy from the Belt and Road Initiative (BRI), the flagship of President Xi Jinping‘s foreign policy, because only the Chinese side drew benefits. This decision was difficult and caused opposition from other Italian political parties. Nevertheless, the movement represented a new chapter in the relations between Italy and the People’s Republic of China, Europe, and the Western World.

The frozen Russian assets on the table

Among the complex issues on the agenda is the discussion on the use of approximately $300 billion worth of frozen Russian financial assets seized after Moscow invaded Ukraine in February 2022. 

The G7 and the European Union have debated on how and whether to use these funds to support Ukraine. The United States has proposed seizing the assets, but Europe has expressed concerns, citing risks to the euro and potential legal repercussions. Recently, the US has advocated using the assets as collateral to provide loans for Ukraine, adding another layer of complexity to the discussion. 

Moreover, in the first week of May, the EU member states, following weeks of intense negotiations, have agreed “in principle” to provide Ukraine with additional aid totalling up to 3 billion euros annually for arms and ammunition. Interest earned by frozen Russian central bank assets now held in the bloc would underwrite the proposed deal.

Serhiy Marchenko, an experienced economist and Ukraine’s Minister of Finance has been invited to the Stresa meeting.

“We will be pleased to welcome Minister Marchenko, who will participate in the session focused on support for Ukraine, and we will share our views on the balance of sanctions on Russia,” Minister Giorgetti said.

“The G7 will welcome the EU’s decision to use windfall revenues from tied Russian sovereign assets for the benefit of Ukraine and will exchange views ahead of the summit in mid-June,” the Italian minister added. 

Giorgetti also recalled that, as the G7 presidency, “Italy remains committed to acting as an ‘honest mediator’ in the discussion, determined to ensure coordination with the G7 and the European Union. We must carefully evaluate the proposal in all its aspects and ask for clarification before making a decision.”

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