This Friday President Trump gave a speech to the delegation at the World Economic Forum in Davos, Switzerland, and affirmed his policy of ‘America First’, while also requesting for nations to increase their investment in the United States.
The New York Times reported yesterday that there was a “rough consensus” that emerged over Trump’s two-day visit and that this visit showed the administration had “shown itself to be more pragmatic than advertised.
This sentiment was echoed by Vas Narasimhan global head of drug development for Novartis, who attended a dinner Mr. Trump hosted on Thursday night with leaders of more than a dozen European companies. who stated that:
“There’s a very constructive mind-set in the Trump administration to find the best path forward. I’m optimistic that, with other world leaders, most of these issues can be tackled in a productive way for the global economy and for global businesses.”
Trump’s address focused on the growing American economy, with the President taking credit for a bullish stock market and strong economic growth, the passage of the $1.5 trillion tax cuts, recent job growth and recent lows in African-American unemployment. All of these factors, according to the address, have poised the economy for growth, and are attractive pull factors to bring firms and investment to the United States.
According to economists, the US is facing its ninth year of expansion, a culmination of efforts by the Federal Reserve to stimulate commercial activity and keep interest rates low. The IMF also announced that it was lifting its forecasts for American growth due to the recent tax cuts.
Jeffrey Rosen, deputy chairman of the financial advisory firm Lazard, said: “U.S. tax reform makes it more economical to do business in the United States. Deregulation makes it easier. These messages appear to be resonating with C.E.O.s of businesses outside the U.S.”
The leader of the World Economic Forum, Klaus Schwab, stated:
“On behalf of the business leaders here in this room let me particularly congratulate you for the historic tax reform,” Mr. Schwab said, adding that the tax cuts were “fostering job creation while providing a tremendous boost to the world economy.”
The President also asked executives how they planned to increase investment in the United States, and that America was open for business.
Many policy analysts worried that President Trump’s criticism of the World Trade Organization, opposition to the North American Free Trade Agreement (NAFTA) and his comments about a “trade war with China” could hurt economic growth, but some global leaders suggested that Trump’s rhetoric could be an aggressive bargaining tool to ensure nations comply with trading rules and implement sensible trade policies.
Cecilia Malmstrom, the European Trade minister, worried about American policy aggressing China but also echoed concerns about the actions of Chinese firms. “There are some grave concerns on China, who are massively subsidizing state-owned companies,” Ms. Malmstrom mentioned. “And there, yes, we could work with the U.S.”
Overall the tone of both Trump’s address and the response it received from world leaders seemed to be positive. This coupled with the momentum of his cabinet yesterday at Davos suggests that the administration has simmered down its foreign policy with respect to international trade from previous remarks.
However as new policies are introduced and implemented, it remains to be seen how the suggestions from Davos will materialize into actual policy.