Finance ministers and central bankers from around the globe are convening in Cape Town this week for the Group of 20 (G-20) summit, facing a new wave of challenges to the global economy, including the looming threat of trade wars and escalating geopolitical tensions, Bloomberg reports.
Having navigated market meltdowns, recessions, wars, and a pandemic over the past quarter century, these leaders are now grappling with a significant shift: the US, traditionally a champion of stability and multilateral cooperation, is increasingly seen as a source of disruption under President Donald Trump.
Trump’s imposition of 10% tariffs on all Chinese imports and threats of higher import taxes on key trading partners, including Mexico, Canada, and the European Union, have cast a shadow over the G-20 meeting.
Adding to the concerns, the US is sending a diminished presence to the summit. Treasury Secretary Scott Bessent is skipping the meeting, following Secretary of State Marco Rubio’s absence from the G-20 foreign ministers gathering in Johannesburg last week. This comes on the heels of Trump’s deepening diplomatic tensions with European allies by voting alongside Russia against a United Nations General Assembly resolution condemning Russia’s alleged agression in the war in Ukraine.
The setting of Cape Town, a coastal city near the southern tip of Africa crucial for global trade routes rerouted due to Red Sea attacks, serves as a poignant reminder of the geopolitical turmoil shaping the world economy.
Since taking office, President Trump has prioritized domestic prosperity. This has included withdrawing the US from the World Health Organization and the Paris climate accord, as well as slashing foreign aid to Africa and other developing nations.
Bessent’s absence coincides with top officials from Mexico and Canada focusing on preserving the integration of the North American economy, threatened by Trump’s potential imposition of 25% tariffs on their imports starting March 4.
Further highlighting the divisions, US officials have reportedly resisted the inclusion of references to climate change and concepts like “inclusion” in the summit’s joint communique.
Despite these challenges, South African President Cyril Ramaphosa urged finance ministers to find common ground and unite in their efforts to address global economic challenges.
Since Trump’s election in November, a gauge of trade policy uncertainty has soared to its highest level since 2019, reflecting the growing anxiety in the global markets. The price of gold has jumped to a record high, driven by safe-haven demand, while stock markets have struggled for direction and 10-year Treasury yields have slipped amid concerns about global economic growth.
EU officials are assessing the potential economic damage from Trump’s threatened tariffs and are preparing to retaliate while remaining open to negotiations.
