UPDATE 2-Battered by Trump, G7 leaders choose to be "polite," productive

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OTTAWA, June 7 (Reuters) - Leaders of the Group of Seven rich nations headed for a summit in Canada on Thursday more divided than at any time in the group's 42-year history, as U.S. President Donald Trump's "America First" policies risk causing a global trade war and deep diplomatic schisms.

In a bid to rebuild America's industry, Trump has imposed hefty tariffs on steel and aluminum imports, including those from key G7 allies like Canada, Japan and the European Union.

He has threatened to use national security laws to do the same for foreign car imports and has walked back on environmental agreements and an international deal to prevent Iran from building a nuclear bomb.

Trump will arrive in Canada on Friday, on the way to Singapore where he hopes to strike a historic nuclear deal with North Korean leader Kim Jong Un.

The U.S. president is in no mood for compromise over trade and now has frosty relations with Canadian Prime Minister Justin Trudeau, the summit host. Pleas by the other member countries for exemptions from the steel and aluminum tariffs, which went into effect on June 1, have fallen on deaf ears in Washington.

But rather than seek a fight with Trump at the summit, French President Emmanuel Macron made an appeal for productive discussion.

"In this environment, above all we always have to stay polite, stay productive and try to convince (them), to keep the United States on board because they are our historical ally and we need them," Macron told a news conference held with Trudeau in Ottawa on Friday.

But he urged the other industrialized countries to stick together.

"We must not fall apart. The six other nations of the G7 represent a market that is larger than the American market," Macron said.

As well as the metals levies, Trump has ordered an investigation into whether car imports also threaten national economic security, a move that would hit G7 members Germany and Japan particularly hard.

German Chancellor Angela Merkel said she expected "difficult discussions" at the summit while Canada and Mexico already have retaliated against a range of U.S. exports and the EU has promised to do so as well, raising the specter of a tit-for-tat escalation.

Adding to the uncertainty is European anger over Trump's decision to pull the United States out of the international nuclear agreement with Iran. European allies have urged Trump to reconsider.

The disagreements between the seven countries are so deep that they may not be able to find enough in common to issue a joint statement.

I think they will express their concern, probably more individually than as a group, quietly, said James Blanchard, a former U.S. ambassador to Canada for former President Bill Clinton.

"I don't think anybody is going to confront him. (Reporting by David Ljunggren Additional reporting to Roberta Rampton in Washington Editing by Alistair Bell)