Canada rejects US duties on lumber as 'baseless'

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A slew of recent announcements-including an investigation into steel imports and a warning the US may pull out of a trade agreement with Canada and Mexico-have renewed fears the Trump administration could spark a trade war that could hit the global economy just as it appears to be gaining momentum.

Italian Economy Minister Pier Carlo Padoan, the G7 host, said Trump's plan to slash taxes on businesses was "ambitious" and he was keen to hear more about it from Mnuchin.

The China deal came just months after Trump was attacking Beijing in an election campaign in which he promised to restore trade barriers if he felt they were needed to protect USA interests. "We can discuss, we can have different appreciations, but we are in the same world and in the same boat", he said.

Group of Seven finance chiefs don't see eye-to-eye on trade, so they're reverting to a default issue in economic diplomacy, Bloomberg reported.

Italian lenders are saddled with about €350 billion (RM1.6 trillion) of bad debt, a third of the euro zone's total, and are considered a threat to the improving growth prospects for the European economy.

The US is adamantly challenging the status quo in worldwide trade, and as a result, the most recent G7 meeting produced an indecisive communique, indicating the rising degree of uncertainty, possibly bearing the seeds of trade wars and greater currency manipulations in the global struggle for competitiveness.

Mnuchin's presence was overshadowed by a political firestorm in Washington after Trump fired Federal Bureau of Investigation chief James Comey, whose agency was investigating links between the president's 2016 election campaign and the Russian government. The Sessions memo marks the first significant criminal justice effort by the Trump administration to bring back the toughest practices of the United States war on drugs, which had fallen out of favour in recent years.

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Trump has proposed slashing the US corporate income tax rate and offer multinational businesses a steep tax break on overseas profits brought back home. They'll also look for ways to promote growth and combat terrorist financing and tax avoidance by major corporations.

The latter has been on the G7 agenda since the 2007-08 financial crisis. But it has been given added urgency by Britain's vote to leave the European Union and Trump's election triumph, shocks attributed to the negative impact of recent economic trends on key demographics.

Finance ministers also said that countries would have to do more to distribute growth more equally.

"Many of us, including myself and Dr. Schaeuble (German Finance Minister), told Mr. Mnuchin that it is unthinkable that in the weeks and months to come, we can allow the established framework to be debated", Michel Sapin, Finance Minister of France, said.

One idea in a package dubbed "web tax" would require companies like Facebook to collect VAT on all advertising revenues in the countries they are generated in.

Follow CNBC International on Twitter and Facebook. "There are different national positions but the the objective of the G7 is to get convergence towards a common vision on these issues".