While battles between police and protestors smoulder outside, leaders of the European Union, United States and China appear close to a trade war cliff edge at the G20 summit in Hamburg.

"We are already hearing that some parties are considering introducing protective measures against steel imports in the near future. If this does happen, the European Union will know how to respond appropriately," European Commission chief Jean-Claude Juncker said before talks began Friday.

US President Donald Trump has vowed to slap tariffs on steel imports to protect American industry, and Washington could start levying the charges as soon as July 13.

Customs duties on certain steel pipes alone would affect imports to the US worth $152.6 million last year.

Germany ($38.8 million) and China ($29.4 million) accounted for the biggest shares, followed by Switzerland, India, South Korea and Italy.

For its part, the EU has taken measures against some Chinese steel products, arguing that the government is providing unfair subsidies to manufacturers and distorting the market.

- Revenge on the rocks? -

Washington's steel threats have raised hackles in Europe, pushing trade disputes to the top of the agenda as heads of government from leading industrialised and emerging countries gather for the Germany-hosted G20.

The event usually ends with a joint communique setting out how leaders will cooperate on issues including global free trade, but details of the wording remained under intense negotiation Friday.

"Europe can't be placed on the same level with unfair competition practices we don't engage in" like China's, the French president's office said, vowing a "very speedy" reaction if the US targets the Old Continent's exports.

EU leaders have quickly cobbled together a list of American products they could strike back at with sanctions, ranging from Kentucky bourbon to orange juice and dairy products, the Financial Times reported Friday.

Commission chief Juncker would not confirm the details, but insisted that Brussels was on high alert and would take only "days" to react to US measures.

China, which produces around half the world's steel supply, has been less talkative on the subject in Hamburg.

But Beijing raged against the European sanctions last month, accusing Brussels of failing to understand its loan system.

"It is biased and unfair for Europe to blame China for its own industrial issues," said Wang Hejun, a senior official at the Chinese trade ministry.

- Guessing game -

Whatever text the G20 can agree on will come under a magnifying glass, as the steel row is only the most acute of a long list of complaints about trade.

At last year's summit in Hangzhou, China, leaders agreed that "excess capacity in steel and other industries is a global issue which requires collective responses," setting up a mechanism for "increased information sharing and cooperation" to try and address the problem.

Nevertheless, "the Chinese haven't really shared all the information" others were hoping for, a source close to the negotiations told AFP recently.

"The signal we have been giving is that we are absolutely ready to work with the US" to target Chinese steel, a senior EU official told the Financial Times on Friday.

However, "it will be very hard politically to cooperate on those issues if we are not excluded" from the Americans' sanctions, they added.

US acceptance of language supporting free trade at a G7 summit in Taormina, Italy earlier this year stoked observers' hopes that agreement could be found.

But Trump has since returned to the protectionist "America First" rhetoric that carried him into the White House.

He has especially targeted Germany, whose massive trade surplus he argues is "very bad for the United States".

Germany's Chancellor Angela Merkel on Friday called for a "multilateral" solution faced with a global steel glut.

"Otherwise the likelihood of bilateral measures will simply be greater," she said.

Source: AFP