Trump should put confrontation aside at Davos
In his keynote address to the World Economic Forum, the protectionist US president is best advised to talk cooperation and not show how out of step he is
The World Economic Forum in Davos is no place for United States President Donald Trump to push his agenda of protectionism, particularly after his approval of new tariffs on imports. Liu He, President Xi Jinping’s top economic adviser, and leaders, including those of Canada and India, have made that obvious in speeches defending free trade and globalisation. They were preaching to the converted; the business elite who attend the annual event in the Swiss resort are the champions of the unrestricted movement of capital, people and ideas. It is no place for the US head of state to show how out of step he is with international trends and demands.
Trump’s “America First” policy does not sit easily with his claims to be an advocate of free, fair, open and reciprocal trade. On Monday, he signed off on tariffs on imports of solar energy components and large washing machines, the first appearing to be aimed at China, the latter at South Korea. But the measures are neither targeted, nor unusual; they affect a number of countries and make use of a provision sometimes employed in US trade law that the previous two presidents turned to for political effect against China on tyres and steel. A threatened trade war did not occur then and it will not directly result from the latest action.
The problem is what Trump will do next, his record as president so far being centred on fulfilling campaign promises and an outstanding one is to balance trade with China. This is despite the deficit getting ever narrower as the Chinese economy turns from being export-driven to a consumer market. In the decade to 2016, the volume of US goods exported to China increased to almost double the rate of those going in the opposite direction.
Further opportunities for restrictions loom. Earlier this month, the US Department of Commerce completed an investigation into whether Chinese steel and aluminium imports constituted a threat to national security, giving Trump three months to decide whether to impose tariffs and quotas. Another probe is under way into the alleged abuse of intellectual property rights.
Liu said China would open its domestic markets wider and reforms this year could “exceed the international community’s expectations”. Trump has accused Beijing of “economic aggression”, but its efforts point squarely at cooperation. The world cannot afford a trade war between its biggest and second-biggest economies; together they account for more than a third of global output and the collateral damage of such a fight would be disastrous. Trump would do best to use his Davos appearance today to ease concerns and shun confrontation in favour of communication and cooperation.