President Donald Trump declared the U.S. “open for business” in a speech at the World Economic Forum Friday, but his words did little to reassure some who fear his protectionist trade policies will harm American businesses and consumers.
“’America First’ does not mean America alone,” Trump said in Davos, Switzerland, attempting to balance the nationalist rhetoric of his campaign with a pitch for more economic engagement with the global community.
As Trump outlined it, his position is to put America’s interests ahead of others but to also make the country attractive to foreign investment and seek a level playing field for international trade.
“It was very much Donald Trump the salesman,” said Stephen Silvia, a professor of international relations at American University. “And he did a good job. It was a positive, constructive speech.”
Some had feared that the fiery Donald Trump who demonized America’s trading partners on the campaign trail would take the stage and lecture world leaders on their transgressions, but the president was critical of trade practices without being combative.
“He didn’t break any china at all,” Silvia said.
Though he condemned intellectual property theft and currency manipulation, Trump eschewed the attacks on specific countries like China and Mexico that were common themes at his rallies.
“These and other predatory behaviors are distorting the global markets and harming businesses and workers, not just in the U.S. but around the globe,” he said Friday without singling out offenders.
Trump touted the stock market’s performance since he took office and the new investments in the U.S. that many companies have already announced, predicting much more to come.
“America is roaring back,” Trump said, “and now is the time to invest in the future of America.”
The speech focused on two key points: that tax cuts and deregulation have made America a better place to “innovate, create, and build” and that he welcomes mutually-beneficial bilateral trade agreements.
“There has never been a better time to hire, to build, to invest, and to grow in the United States,” he said, highlighting the drop in corporate taxes and the elimination of what he called “stealth taxation” of excessive regulations.
The president promised to enforce trade laws and “restore integrity” to the trading system. However, he emphasized that he will seek fair and reciprocal agreements that benefit all nations.
“We cannot have free and open trade if some countries exploit the system at the expense of others,” he said.
Trump even suggested he would be open to a new joint agreement with the signatories to the Trans-Pacific Partnership, a trade pact he withdrew from soon after taking office.
“We have agreements with several of them already,” he said. “We would consider negotiating with the rest, either individually or perhaps as a group, if it is in the interests of all.”
According to Sylvia, Trump’s stance represents a departure from post-World War II U.S. economic policy by embracing the principle that if everyone acts in their own interest, it will result in the best outcome for everyone.
“I understand the argument…but I’m not sure when you’re talking about not just markets but politics that it actually would work in practice,” he said.
While Trump’s performance in Davos may have been less isolationist and more conciliatory than much of his past rhetoric, his domestic critics appeared unmoved.
While Donald Trump and the "masters of the universe" assemble in #Davos, the 6 richest people own as much wealth as the bottom half of the world's population – 3.7 billion people. We need a global economy that works for all, not just multi-national corporations and the very rich.— Bernie Sanders (@SenSanders) January 26, 2018
“While Donald Trump and the "masters of the universe" assemble in #Davos, the 6 richest people own as much wealth as the bottom half of the world's population – 3.7 billion people,” Sen. Bernie Sanders, I-Vt., tweeted soon after Trump spoke. “We need a global economy that works for all, not just multi-national corporations and the very rich.”
“Sorry to see business leaders in #Davos2018 @wef fawning over @realDonaldTrump because they love tax cuts and deregulation and care much less about racism, reaction, rule of law and international cooperation,” tweeted former Treasury Secretary Lawrence Summers.
Trump’s comments on the resurgent U.S. economy came as the Department of Commerce released data Friday showing GDP growth slowed in the fourth quarter of 2017 to a still-healthy 2.6 percent after two quarters of growth above 3 percent. Overall growth for 2017 is estimated at 2.3 percent.
Many economists expect the tax cuts passed in December will provide a strong but short-lived jolt to the U.S. economy in 2018. Trump has predicted consistent growth of at least 3 percent as a result of the legislation and his other economic policies.
Trump made the case that a strong U.S. economy means a strong global economy.
“When the United States grows, so does the world,” he said. “American prosperity has created countless jobs all around the world.”
For some listeners, though, “America First does not mean America alone” amounted to a muddled message, albeit one that reflects the mixed signals they see in the Trump administration’s policies.
“We don’t know what the slogan means,” said David Williams, president of the Taxpayers Protection Alliance. “It’s his actions that we’re concerned about.”
Williams is unable to reconcile Trump’s promotion of corporate tax cuts that ostensibly appeal to foreign businesses with tariffs his administration placed on foreign-made solar panels and washing machines this week. He expects foreign leaders and businesses will share that confusion.
I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States. Great to see Apple follow through as a result of TAX CUTS. Huge win for American workers and the USA! https://t.co/OwXVUyLOb1— Donald J. Trump (@realDonaldTrump) January 17, 2018
“That’s why there’s this intrigue about Donald Trump,” he said, “because on one hand he lowers taxes but on the other he raises tariffs.”
“Who is this man?” trading partners will be asking, according to Williams. “Is he a fiscal conservative? What is he about?”
Backing out of major trade deals while maintaining he supports free trade could add to the uncertainty.
“Our trading partners are going to see this announcement about the tariffs and they’re going to freak out,” Williams said. “This is not good. This could start a new trade war.”
However, Silvia noted that the last two presidents imposed tariffs on certain goods even earlier in their first terms than Trump, so the prospect of dire consequences may be overstated. If Trump follows through on some of his other trade rhetoric, the impact would be much bigger.
“He could go way beyond that,” he said. “Canceling NAFTA would be a completely different thing.”
Silvia pointed to another contradiction between the policies Trump championed in Davos and those he has espoused elsewhere.
“President Trump made the case for more foreign direct investment in the U.S., but at the same time President Trump is making a case to reduce the trade deficit of the U.S. and you can’t do those two things at the same time,” he said.
Trump’s tax and regulation policies have made the U.S. more attractive to foreign companies, even if their leaders still bristle at his nationalism.
“I think it’s a message that plays better with the business elites than with the political elites,” Sylvia said.
The challenge for Trump now is to thread that needle between “America First” and “America alone” on economic policy, and Williams is concerned the president is already heading down the wrong path.
“First he lowers corporate taxes,” he said. “Businesses are very excited about that. They want to come back to the U.S. Then he raises tariffs, which is bad, so it’s one step forward, two steps back when it comes to this administration and fiscal policy.”