Brags and Threats: Trump Outlines Foreign and Domestic Policy at Davos
President Trump at Davos in 2020. Photo Courtesy: The White House via Wikimedia Commons
Last week at the World Economic Forum in Davos, President Trump addressed global leaders in government and business via webcam looming over the conference – a testament to the bullish approach he was about to put forward.
Trump presented a largely transactional and protectionist foreign policy, diluting his sentiment with the occasional free-market policy to stifle any alarms of isolationism. Among his statements, the loudest included calling for NATO members to increase their defence spending to 5% of their GDP, up from the previous target of 2%, to halt what Trump deemed as a disproportionate military contribution from the US. A not-so-unpopular aspect of his “America first” stance. Additional pressures and threats included demanding foreign companies increase investment in US factories and that the EU halt fining American technology companies for competition policy violations–or face trillions of dollars worth of tariffs.
A clear contrast presented itself in Trump’s approach to Canada, versus Saudi Arabia. In an effort to readjust the trade deficit between Canada and the US, and bulldoze national debt, Trump is paving the way for a trade war. He promised to impose tariffs up to 25%, that is unless Canada allows Trump to engulf them into the USA, with the president noting that then “we won't have to tariff you,” Regarding Saudi Arabia, Trump stated he aims to collaborate on trade, and that the Crown Prince has pledged $600bn toward investment into the US. Although President Trump will be asking “to round it out to around $1 trillion”, the specific direction remains undefined.
It is apparent that Trump’s message is: if countries behave accordingly, harm will be minimal, and everyone will benefit. However, his protectionist attitude towards other nations, when combined with his domestic reneging on climate policies, DEI initiatives and business regulation, shows a loyalty to US businesses and stock market indicators (which did rise following his address). In comparison, US families could suffer an estimated $2600 increase in the cost of living as a result of increased tariffs.
Leaders appear to be taking a wait-and-see approach to Trump’s demands. The UK, in theory, has no reason to worry, given that the US does not have a trade deficit with the UK, and Trump has even praised Starmer, describing a “very good relationship” between the two. Nevertheless, there are concerns that tit-for-tat trade wars could profoundly stagnate growth worldwide.