Trump, EU leaders trade barbs at G7 summit as threat of recession looms

US President Donald Trump and EU leaders exchanged trade war threats on Saturday as they arrived in France for a G7 summit of wealthy democracies overshadowed by trans-Atlantic tensions before it had even begun.

"Trade wars will lead to recession, while trade deals will boost the economy," EU Council President Donald Tusk said in Biarritz, the chic Atlantic resort chosen by French host President Emmanuel Macron to stage the annual meeting.

Trump flew into Biarritz on Air Force One hours after promising to impose punishing tariffs on French wine imports if Macron doesn't withdraw a tax on US tech giants.

 

And Tusk vowed that the EU "will respond in kind." "The last thing we need is a confrontation with our best ally, the United States," he said. "This is not our initiative, this trade and tariff struggle, but we have to be ready and we are ready."

It was a combative opening to the G7 summit, traditionally a forum for frank-yet-cordial discussions among leaders from the world's leading economies -- but much less so since Trump's election.

European leaders are also using the summit to mount a tough push for action against fires in the Amazon rainforest, despite Brazilian right-wing President Jair Bolsonaro's angry response to what he sees as outside interference.

Echoing a warning from France, Tusk said Bolsonaro's response to the fires and his downplaying of climate change threw into question a major EU-South America trade deal.

"We of course stand by the EU-Mercosur agreement, which is also about protecting the climate and the environment," he said.

"But it is hard to imagine a harmonious process of ratification by the European countries as long as the Brazilian government allows for the destruction of the green lungs of planet Earth."

G7 leaders were greeted by a mass protest outside Biarritz, though 13,000 police have been deployed to keep them far from view.

Organisers said 15,000 people rallied around 30 kilometres (20 miles) south of the G7 gathering at the border town of Hendaye for a march over the Bidassoa River toward the Spanish town of Irun.

Red, white and green Basque flags waved above a crowd that included anti-capitalists, environmental activists as well as a few dozen of France's "yellow vest" anti-government protesters, according to AFP journalists at the scene.

"It's important to show that people are mobilised and do not accept the world they're offering us," said Elise Dilet, 47, of the Basque anti-globalisation group, Bizi. The rally was peaceful so far, after police said 17 people had been arrested as of Friday night amid clashes with protesters camped out near Hendaye.

Talks in the beach resort, known for fierce rainstorms that blow in from the Atlantic, will also be dominated by the darkening clouds over the world economy. Wall Street stocks slumped Friday after Trump escalated his trade war with China that is seen as responsible for a global slowdown.

"We don't need China and, frankly, would be far... better off without them," Trump tweeted on Friday, saying US companies were "hereby ordered to immediately start looking for an alternative to China." His outburst came after China imposed tariffs on US imports worth $75 billion in response to an earlier round of American measures. Trump hit back immediately, raising tariffs still further.

And as he left for Biarritz, Trump also fired a salvo at France, threatening to slap heavy tariffs on its wine in response to its move to impose a sales tax on tech giants like Facebook, Apple and Google.

"Those are great American companies, and frankly, I don't want France going out and taxing our companies. Very unfair," he told reporters at the White House. "And if they do that, we'll be taxing their wine... like they've never seen before." In a televised address ahead of the summit, Macron said his goal was "to convince all our partners that trade tensions are bad for everyone".

The G7 meeting will also be the full international debut of British Prime Minister Boris Johnson, who will meet Trump for the first time as a leader. They are expected to discuss the UK's impending exit from the European Union, which the US president has enthusiastically backed.

But though Johnson needs Trump's support for a free-trade deal, he is at odds with him on a range of issues including the Iran nuclear crisis, climate change and global trade.

Trump is likely to find himself under pressure from the Europeans, particularly Macron, to ease off on his policy of "maximum pressure" on Iran over its nuclear programme.

Since pulling out of the landmark 2015 nuclear agreement limiting Tehran's nuclear programme, Trump has slapped crippling sanctions on the Iranian economy. Macron wants him to put a "pause" on the policy, an aide said recently, which would enable talks to find a new diplomatic solution to the crisis.

Iranian Foreign Minister Mohammad Javad Zarif told AFP on Friday that Macron's "suggestions" to find a way out of the current impasse were "moving in the right direction.