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Trade war

Trump sends mixed messages on China as G-7 watches helplessly

Second thoughts become regrets for 'not raising tariffs higher'

Group of Seven leaders discussed issues including risks to the global economy Aug. 25 at their summit in Biarritz, France.   © Reuters

BIARRITZ, France -- U.S. President Donald Trump sent heads spinning in his trade war with China on Sunday by suggesting regrets about the pressure campaign, only for a spokeswoman to step in and reinforce his hard line. 

Meanwhile, other Group of Seven leaders expressed concern about the escalating tensions in a meeting on the global economy, where trade friction was high on the agenda, but the talks produced no course of action.

Trump's remark in a news conference at the G-7 summit here came just two days after China announced another round of retaliatory duties on American goods, to which Trump responded by announcing a tariff hike.

Asked whether he was having second thoughts, Trump replied, "Yeah, sure. Why not?"

"I have second thoughts about everything," he said.

White House press secretary Stephanie Grisham emailed reporters later to clarify the comment. "President Trump responded in the affirmative -- because he regrets not raising the tariffs higher," she wrote.

Trump also said he could "declare a national emergency" on China but has "no plan right now" to do so.

G-7 leaders agreed to take all possible measures in response to the growing downside risks to the global economy, according to a Japanese government spokesperson. But a government source familiar with the discussions said that "there was no special discussion of individual policies."

The clash is harming G-7 members besides the U.S. Slowing Chinese growth has cut into Germany's auto exports, raising the threat of recession. Europe's largest economy contracted 0.1% in the April-June quarter compared with the previous three months.

Japan has been hit as well, with exports falling year over year for eight straight months through July.

Japan and the European Union would normally urge the U.S. to show more restraint in trade conflicts, but their own disagreements with the Trump administration have left them unable to serve as an effective check.

Trump has complained about the American goods trade deficits with both -- $169.3 billion with the EU and $67.6 billion with Japan last year -- and provoking him could invite stronger pressure to address the imbalances.

Washington is weighing tariffs on European vehicles and auto parts and has grumbled about subsidies to aircraft maker Airbus. Trump has also talked about slapping a duty on French wine in retaliation for Paris taxing American technology groups. European Council President Donald Tusk warned Saturday that the EU would respond to such a move "in kind."

With international cooperation looking stalled, Japanese Prime Minister Shinzo Abe urged action to reform the World Trade Organization while promoting the global free trade system with the WTO at its center.

G-7 leaders largely shared the view that reform is necessary, according to Tokyo. But movement on this front appears unlikely, given American distrust of the organization.

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