By Jeffrey T. Lewis

BUENOS AIRES -- The finance ministers and central bankers of the G-20 group of countries ended their meeting here with little progress on resolving global trade tensions sparked by President Donald Trump's tariffs, with the U.S. and EU both insisting their conditions for trade talks must be met.

U.S. Treasury Secretary Steven Mnuchin got the ball rolling Saturday morning when he told reporters that the U.S. is ready to start talks on trade agreements with China, the EU and the Japanese, but that those trading partners must first level the playing field by removing tariffs, non-tariff trade barriers and subsidies.

Mr. Mnuchin specifically mentioned that U.S. companies shouldn't be forced into joint ventures with Chinese companies to do business in China nor be forced to transfer technology.

He upped the ante by adding that "it's definitely a realistic possibility" Mr. Trump will follow through on a threat to impose tariffs on all $500 billion worth of goods the U.S. imports from China each year. The U.S. has already set levies on $34 billion of machinery and components from the Asian country, with tariffs on another $16 billion of imports scheduled. The Trump administration also is looking at targeting an additional $200 billion of Chinese products.

French Finance Minister Bruno Le Maire returned fire later Saturday, saying the EU wouldn't hold any talks while the U.S. tariffs are in effect because "we refuse to negotiate with a gun to the head." And if the U.S. follows through with a proposed 25% tariff on imported cars, Europe would have no choice but to retaliate, he said.

The EU is ready to hold talks on changes to the existing multilateral trade system, including at the World Trade Organization, but only if reforms are intended to strengthen the system and not weaken it, Mr. Le Maire explained.

The meeting in the Argentine capital was scheduled to concentrate on issues including infrastructure for development and the future of work, but the conflict over Mr. Trump's tariffs on steel, aluminum and Chinese electronics and other goods, and the retaliatory tariffs imposed by the EU, China and other countries, were a constant undercurrent.

One concern of many participants in the meetings brought up was the effect of the tariffs on economic growth. International Monetary Fund Managing Director Christine Lagarde told delegates on Saturday that her organization estimated the conflict would cost the world around 0.5% in gross domestic product, based on current measures and "in the worst case scenario."

The U.S. would be harder hit than other countries by the tit-for-tat tariffs because a larger share of its exports will be subject to the punitive levies, according to the IMF's calculations.

Mr. Mnuchin said the U.S. government is monitoring the impact of the tariffs very closely, but that on a macroeconomic basis "we don't see yet any impact on the economy."

He added that the producers of some goods, such as lobsters in Maine and bourbon whiskey in Kentucky, are feeling the effects. When asked if he expected an impact at the macro level in the future, he replied "I don't."

At a press conference following the end of the meeting, Mr. Mnuchin played down any divisions among members of the G-20 regarding trade, saying the meeting was very productive and that "I didn't feel Isolated at all. I had no time to fit in any more meetings, or I would have had more meetings."

The EU, China, Canada and Mexico, the U.S.'s biggest trading partners, have all hit back hard at Mr. Trump's levies on exports, frequently targeting products, including bourbon, lobsters and soybeans, produced in regions that support the president.

EU economy chief Pierre Moscovici agreed with Mr. Mnuchin, saying so far the impact of the trade measures has been "very limited," while warning that "the risk of escalation is there."

A senior European official who asked not to be identified said Mr. Mnuchin appeared to be ready to cooperate with the EU to resolve the trade dispute, but that first the Treasury secretary would have to convince the president to lift the tariffs.

"What struck me was the willingness of Steve Mnuchin to pave the way for a solution," the official said. But "I'm not sure the solution is in [Mr. Mnuchin's] hands."

European Commission President Jean-Claude Juncker will travel to Washington next week to meet with Mr. Trump for talks on a variety of subjects, including trade.

Germany's Mr. Scholz said he's hopeful that the meeting produces advances in resolving the trade dispute, adding that Europeans won't be pushed around.

"The EU stands united and speaks with one voice," he said.

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

(END) Dow Jones Newswires

July 22, 2018 18:19 ET (22:19 GMT)

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