G7 trade ministers opened a two-day meeting in Paris on Tuesday to tackle critical mineral supply chains and industrial overcapacity. The talks are unfolding as a fifth of the world's oil flow remains blocked by the Strait of Hormuz closure, a disruption that has upended the global economy. A separate, simmering threat from President Donald Trump to raise tariffs on EU cars and trucks will be addressed on the sidelines.
The French presidency set four priorities for the gathering: a collective response to industrial overcapacity, economic security through diversified critical mineral supplies, the paralysis of the World Trade Organization, and the explosive growth of cross-border e-commerce parcels that escape customs duties. None of those priorities include the latest tariff threat from Washington. President Trump declared last Friday that he would hike US tariffs on European vehicles, accusing the EU of failing to comply with a deal struck last summer.
That agreement capped US tariffs on EU autos and parts at 15 percent, lower than the 25 percent duty imposed on many other trading partners. EU lawmakers gave conditional approval in late March, but member countries have yet to ratify it. Trump’s threat will be discussed by Europeans, but “not within the framework of the G7,” the office of France’s junior trade minister Nicolas Forissier said earlier this week.
The policy says one thing. The reality says another. US Trade Representative Jamieson Greer is in the French capital and was expected to meet EU Trade Commissioner Maros Sefcovic.
A meeting with French Economy Minister Roland Lescure is also scheduled. At an informal session hosted by France’s business community on Tuesday, Greer delivered a video message that framed the American approach bluntly. “The United States views trade policy primarily as domestic policy,” he said. He added that Washington is “taking action unilaterally, but also together with willing partners” and called France’s G7 priorities “complementary to US efforts on trade.” The statement signals a White House that sees little daylight between its own industrial strategy and the multilateral agenda Paris is trying to build.
Behind the diplomatic language lies a fundamental tension. The G7 was designed to coordinate policy among allies. Greer’s framing suggests the current administration views coordination as optional—something to pursue when it aligns with domestic political goals.
That approach complicates the first formal priority: industrial overcapacity. The discussion will not formally target China, but Beijing’s subsidization of sectors like steel, aluminum, and electric vehicles has created trade frictions for years. A unified G7 response would carry weight.
Without American buy-in, it loses teeth. Economic security is the second priority. Ministers will focus on securing and diversifying supplies of critical minerals—the raw materials for computer chips, electric vehicle batteries, and super magnets.
France favors creating a system of groups that link producing, processing, and consuming nations committed to good practices. The goal is to reduce dependence on any single supplier, particularly China, which dominates rare earth processing. The Strait of Hormuz closure adds urgency to every supply chain conversation.
A fifth of the world’s oil normally transits the waterway. Its disruption has scrambled energy markets and exposed the fragility of just-in-time global trade. Ministers are meeting under the shadow of a physical bottleneck that no trade agreement can fix.
The World Trade Organization’s paralysis will also get attention. The latest round of WTO negotiations failed in March. The body’s role as a trade referee has been crippled by the United States for years, which has blocked appointments to the appellate body. “The goal is for this organization to be better suited to current challenges,” Forissier’s office said.
Reform language is easy. Agreement on what reform means is not. Cross-border e-commerce is the fourth agenda item.
Online platforms have generated huge volumes of small parcels that slip under customs thresholds, creating what many governments see as unfair competition for local retailers. The United States suspended the tariff exemption on packages valued under $800 last year. The EU will implement a flat-rate customs duty on packages under 150 euros this summer.
The economic toll extends beyond policy papers. Small retailers in cities from Lyon to Toronto have spent years watching customers browse their stores, then order the same products online from platforms that exploit customs loopholes. The EU’s flat-rate duty aims to level that playing field.
What this actually means for your family: if the Trump administration follows through on its tariff threat, European automakers face higher costs to sell in the American market. Those costs tend to land on consumers. A 25 percent tariff on a $40,000 vehicle adds $10,000 to the sticker price.
Automakers might absorb some of that, but history shows most gets passed to buyers. The US-EU auto deal from last summer was supposed to prevent exactly this scenario. Its uncertain ratification status—approved by EU lawmakers with conditions, not yet by member states—has given Washington an opening to claim non-compliance.
The legal details matter less than the political signal. Trump is willing to use tariffs as leverage even with allies who thought they had a deal. Both sides claim victory.
Here are the numbers: EU auto exports to the United States totaled roughly €56 billion in 2023. A tariff hike would affect a substantial share of that trade. German automakers BMW, Mercedes-Benz, and Volkswagen operate factories in the US, but they also export high-margin models from Europe.
Those vehicles would face the higher duties. Greer and Sefcovic’s bilateral meeting in Paris is where the real negotiation will happen. The G7 provides cover and context, but the tariff fight is a two-player game.
Whether they can find a path to de-escalation before the June 15-17 G7 leaders' summit in Evian, on the shore of Lake Geneva, is the question hanging over every handshake in Paris. The French presidency has deliberately kept climate off the formal trade agenda to avoid a clash with Washington, a concession that shows how much the G7’s ambition has contracted. What was once a forum for broad coordination now operates within boundaries drawn by the most reluctant member.
Why It Matters: A US-EU tariff escalation would raise prices for American car buyers, squeeze European automakers already navigating the electric vehicle transition, and further erode the multilateral trade framework that has governed global commerce since 1947. The G7's ability to address any of its four priorities depends on whether Washington sees cooperation as a tool or an obstacle. - G7 trade ministers are meeting in Paris through Wednesday, but Trump's threat to hike EU auto tariffs is being handled on the sidelines, not on the formal agenda. - The four formal priorities are industrial overcapacity, critical mineral supply chains, WTO reform, and cross-border e-commerce customs enforcement. - US Trade Representative Greer framed trade policy as “primarily domestic policy,” signaling limited appetite for multilateral coordination. What comes next: The ministers conclude their talks on Wednesday.
Greer’s bilateral meetings with Sefcovic and Lescure will determine whether the tariff threat escalates or cools. EU member states must still ratify the auto tariff deal, a process with no fixed deadline. The G7 leaders' summit in Evian from June 15 to 17 will test whether this week’s ministerial talks produced any durable agreements—or just more communiqués that paper over cracks.
Key Takeaways
— - G7 trade ministers are meeting in Paris through Wednesday, but Trump's threat to hike EU auto tariffs is being handled on the sidelines, not on the formal agenda.
— - The four formal priorities are industrial overcapacity, critical mineral supply chains, WTO reform, and cross-border e-commerce customs enforcement.
— - US Trade Representative Greer framed trade policy as 'primarily domestic policy,' signaling limited appetite for multilateral coordination.
— - The Strait of Hormuz closure, blocking a fifth of global oil flow, adds urgency to every supply chain discussion at the meeting.
Source: AFP
