Trump hails ‘great relationship’ with UK’s May
DAVOS: The world’s political and business elite headed yesterday into a compelling encounter with President Donald Trump as the United States bids to carve out a competitive edge in trade, taxes and currency rates. Trump, who has made “America First” the touchstone of his year-old administration, arrived by helicopter at the World Economic Forum in the Swiss Alpine village of Davos, after touching down in Zurich aboard Air Force One.
Before leaving Washington, Trump tweeted that he intended in Davos “to tell the world how great America is and is doing”. “Our economy is now booming and with all I am doing, will only get better…Our country is finally WINNING again!” he said, after demonizing the globalist Davos crowd en route to the White House. Other government leaders and business tycoons in Davos are agog at the tempestuous course of US policy under Trump, who is due to address the forum on its closing day today at the end of a week that saw his administration announce a new package of trade tariffs and spark turmoil on the currency markets.
“I think the most fascinating thing with President Trump is that he has the capacity to surprise, and I’m sure we will be surprised tomorrow,” Alexander Stubb, former prime minister of Finland and the new vice president of the European Investment Bank, said in Davos. Traders and US partners already got one surprise in Davos this week when Trump’s Treasury secretary, Steven Mnuchin, appeared to back away from decades of support by his predecessors for a “strong dollar” policy by declaring “a weaker dollar is good for us”.
International Monetary Fund chief Christine Lagarde yesterday urged Mnuchin to “clarify” his stance on the dollar, which slumped on his remarks. A weak dollar would potentially boost US exporters but cause headaches for all other trading nations. Mnuchin yesterday said he was relaxed about the dollar’s short-term value, doing little to help the reeling unit recover on foreign exchange markets.
“We are not concerned with where the dollar is in the short term, it is a very liquid market and we believe in free currencies,” the Treasury chief told reporters. Mnuchin’s comments were taken as reinforcing a broad offensive in trade built on the “America First” platform, drawing the ire of French Finance Minister Bruno Le Maire. “We want exchange rates to reflect economic fundamentals … and we shouldn’t play with these rates,” he said in Davos.
Race to the bottom
The new tariffs imposed this week on solar panels and large washing machines, which infuriated China and South Korea, combined with big cuts to the US corporate tax are accentuating foreign concern that the United States is abandoning its role as protector of the global trade order. Business leaders in Davos have this week given a broad welcome to Trump’s controversial tax reforms, but European political leaders fear a “race to the bottom” as the United States gains in appeal to foreign investors.
Aside from his speech, Trump will hold meetings yesterday with the British and Israeli prime ministers, both of whom are due to address the forum, as well as Rwandan President Paul Kagame today. With Kagame, who currently chairs the African Union, Trump will likely try to turn a page on his reported derogatory comment about “shithole” African countries.
For her part, British leader Theresa May will encourage activist investors to pressure social media firms into clamping down on fake news, hate speech and sexual harassment, according to excerpts of her speech released by Downing Street.
Nice or nasty?
A year ago, the Davos spotlight was claimed by China’s communist leader Xi Jinping, who took up the torch of global trade to the delight of the well-heeled audience then anxious about Trump’s impending inauguration. The Davos elite are keen now to see which version of Trump will show up-the business-friendly tycoon or the leader who berated the rest of the world at the UN General Assembly last September.
“I think they’ve already built down their expectations so far that anything he may say that’s conciliatory, they’ll be grateful for,” Robert Kaplan, senior fellow at Washington’s Center for a New American Security, said at the forum.
“Yes, people like the fact that markets are high and America has reformed its taxes, but people are very nervous about geopolitics around the world and they are very nervous partially because of Trump,” he said. French President Emmanuel Macron and German Chancellor Angela Merkel “stole the show” at Davos already, Kaplan added, after the European leaders used separate speeches on Wednesday to push back hard against the Trump manifesto.–AFP