As global finance chiefs return from their first collective engagement with the Trump administration, they're bringing home a load of unfinished business.
While the weekend meeting of the Group of 20 in the German spa town of Baden-Baden kept up its tradition of a communique to present a veneer of agreement, it only did so by papering over new cracks in the order underpinning the world economy. Barely hinting at the merits of free trade, the statement's omissions show how global economic diplomacy is now beset with a fault line that could overshadow it for months, if not years.
As recently as last July, the G-20 had promised to "resist all forms of protectionism," a pledge now absent as the previous consensus on commerce is challenged by the recent election of U.S. President Donald Trump. Before he and the rest of the group's leaders meet in Hamburg in July, his counterparts have little more than 100 days to gauge if the removal of those words represents the beginning or the end of his administration's attempt to reset global terms of trade that it abhors as economically unfair.
"Saying that the G-20 wishes to avoid protectionism does not necessarily make it so - arguably protectionism has risen in the past few years in spite of public pronouncements," Paul Donovan, global chief economist at UBS Wealth Management in London, said by email. "However, the deliberate change in tone reinforces the idea that on trade, the Trump administration will implement at least some of the campaign rhetoric."
That shift followed hours of wrangling that kept officials in suspense on whether the G-20 would even mention trade, with occasional doubts that a communique might be produced at all.
The U.S. delegation, led by Treasury Secretary Steven Mnuchin, wanted a reference on the need for trade to be "fair" while China, a previously unlikely champion in such matters, led a defense of the existing rules-based regime under the World Trade Organization.
In the end, ministers agreed that "we are working to strengthen the contribution of trade to our economies," a compromise to salvage what remained of the foundations of an understanding that the G-20 had long largely taken for granted.
Participants such as Pierre Moscovici, the European Union's commissioner for economic and financial affairs, are now holding out for the Hamburg summit to repair the damage.
"The single most important decision which helped to fend off a type of depression like in the 1930s in the wake of the Lehman Brothers collapse was that we avoided a fallback into protectionism and that we kept the global economy open," Moscovici told reporters in Baden-Baden. "I cannot overstate the importance of avoiding any rollback on this."
Speaking in Hanover on Sunday, German Chancellor Angela Merkel and Japanese Prime Minister Shinzo Abe called for a concerted effort to defend free trade, saying global markets can be both open and fair. "Of course we want fair markets, but we don't want to put up barriers," Merkel said.
Despite the change in G-20 wording, observers including Isabelle Mateos y Lago, a strategist at the BlackRock Investment Institute, remain sanguine about the Baden-Baden outcome. She told Bloomberg Television that there's still a "glass half full" view.
"The U.S. secretary of the Treasury engaged in the G-20 meeting very meaningfully and very actively at a time when other signals from the U.S. administration were pointing to less interest in global cooperation," she said. "What matters the most is not what they say - it's what they actually do."
One area of contention that remained relatively untouched at the G-20 meeting was currencies.
Despite Trump administration criticism of Germany's trade surplus, U.S. officials signed up to the G-20's prior comments, "including that we will refrain from competitive devaluations and we will not target our exchange rates for competitive purposes." That lack of formal discord doesn't exclude it also becoming another G-20 battleground in due course, not least as part of the wider trade discussion.