US President Donald Trump is not backing down from the tough line he has taken on trade, the White House's top economic adviser says, setting the stage for a showdown with top allies at this week's G7 summit in Canada.
The meeting on Friday and Saturday in Charlevoix, Quebec, will be the first chance G7 leaders have had to confront Trump in person since US tariffs on steel and aluminium imports from Canada, Mexico and the European Union were imposed last week.
That move unleashed fury in the Group of Seven industrialised nations and prompted quick retaliation from Canada and Mexico and a promise from the EU to do so as well, unnerving investors who fear a trade war that could derail the global economy.
Canadian Prime Minister Justin Trudeau, the summit host, and British Prime Minister Theresa May, who will also attend, are among those to sharply criticise the US tariffs as unjustified and punitive.
"There are disagreements. He's sticking to his guns. And he's going to talk to them," Larry Kudlow, Trump's top economic adviser, told reporters in Washington on Wednesday. "The lines are open, the negotiations are ongoing."
Kudlow added that the US and China had not yet reached a deal to resolve Trump's demand for a smaller US trade deficit with China. Washington has demanded that Beijing take steps to open its markets further to US goods.
The US trade deficit, however, fell to a seven-month low in April as exports rose to a record high, the US Commerce Department reported on Wednesday.
Trump, who has vowed to protect US industry and workers from what he describes as unfair international competition as part of an "America First" agenda, is due to hold bilateral meetings with Trudeau and French President Emmanuel Macron during the summit, Kudlow said.
The meeting with Trudeau could be particularly frosty, given Trump's recent sharp criticism of Canada's trade policies and the anger in Ottawa over Washington's decision to justify its new tariffs on national security grounds.
Ottawa is also frustrated with the slow-moving talks to update the North American Free Trade Agreement, the 1994 agreement between Canada, the US and Mexico.
"I know we're going to have some very, very frank conversations quite clearly around the table," Trudeau told Global TV in an interview, adding he would convey Canada's displeasure over the metal tariffs personally when he met Trump in Quebec.
Two sources in Ottawa said divisions between the US and other G7 members were so great that senior officials in charge of each nation's preparations planned to hold an unusual additional meeting the night before the summit in a bid to find consensus.
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