Although an event entirely comprising of US allies, Trump had angered the majority of the leaders before he had even arrived, imposing trade tariffs on European and Canadian exports.
She said Trump's move underlined the need for greater cooperation within the European Union.
The proposal, made during the two-day Group of Seven nations summit in La Malbaie, Quebec, was strongly supported by other leaders present, the official said, adding that European Commission President Jean-Claude Juncker said he was ready to invest personally in it. Juncker has also offered to visit Washington for a common assessment of EU-US trade to help resolve the dispute, an official said. She added that with Trump's "unpredictable" leadership and the US turn toward isolationism, the European Union needs to hone its response to a raft of issues in an environment in which global institutions need to be "newly proven". But differences remain on how to balance French President Emmanuel Macron's call for more solidarity in Europe.
British Prime Minister Theresa May on Friday warned both Trump and the European Union of the dangers of entering a tit-for-tat trade war over tariffs, urging both sides to instead focus on China's excess steel production.
As well as Merkel glancing at Trump when he arrived late to the summit's gender equality breakfast.
"We won't let ourselves be ripped off again and again", she said, referring to the new American tariffs on imported steel and aluminum.
G7 leaders defend summit after Trump disowns free trade communique
A German official said that if Trump declines to sign a communique, it won't be the end of the G-7, but it would be a worrisome signal.
The bid to gloss over the divide might see the reputation of the G-7 salvaged instead of becoming an unprecedented casualty of USA tariffs, disagreements over climate change and the future of the Iran deal.
Turning to Russia, Merkel said she could imagine Moscow re-joining the G7 format at some point, but there first had to be progress in the implementation of the peace plan for Ukraine.
The picture (and many memes) have since gone viral on the internet, and Trump raised it himself at the news conference after he was asked about his relationship with Canadian Prime Minister Justin Trudeau. "Sometimes I get the impression that the US president believes that only one side wins and the other loses".
Jeremy Corbyn, the head of the opposition and the leader of Labour party, denounced the summit as a failure caused by Trump.
Otto Warmbier's parents hope historic summit leads to 'something positive'
Before they signed the document, Trump and Kim had been involved in one-on-one talks, which came after months of planning. The United States and DPRK will join their efforts to build a lasting and stable peace regime on the Korean Peninsula.