DAVOS, Switzerland (AFP) – The world’s political and business elite headed Thursday 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.
A day after appearing to cast aside decades of US support for a strong currency, Trump’s Treasury Secretary Steven Mnuchin said he was relaxed about the dollar’s short-term value, doing little to help the reeling unit recover on foreign exchange markets.
“I thought my comment on the dollar was actually quite clear yesterday… 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,” Mnuchin told reporters at the World Economic Forum in Davos.
Having said on Wednesday “a weaker dollar is good for us,” by promoting US exports, Mnuchin’s comments were taken as reinforcing a broad offensive in trade as part of the year-old Trump administration’s “America First” agenda.
New tariffs imposed this week that have angered China and South Korea, and 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.
International Monetary Fund chief Christine Lagarde earlier Thursday urged Mnuchin to “clarify” his stance on the dollar, but the US administration is making it clearer that it means business with “America First.”
Scouring the valleys
Trump is due to deliver the closing address at the World Economic Forum on Friday and aides say he will use his surprise maiden appearance to play salesman-in-chief, making the case for investment in a revitalized America.
The president’s security and logistical teams scrambled to prepare the trip at short notice, scouring the valleys around Davos for limited hotel space, battling snowstorms and finding themselves briefly hamstrung by a US government shutdown.
Aside from his speech, Trump will hold meetings Thursday with the British and Israeli prime ministers, both of whom are due to address the forum, as well as Rwandan President Paul Kagame.
With Kagame, who currently chairs the African Union, Trump will likely try to turn a page on his reported derogatory comment about “sh*thole” 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.
Trump, who is traveling with six cabinet ministers, is the first sitting president to attend Davos since Bill Clinton in 2000.
Trump’s business-friendly tax cuts and a record-breaking bull run on Wall Street have wowed many in the Davos crowd. US growth edged up to 3.2 percent in the third quarter.
But the decision by Trump — the self-styled anti-globalist president — to attend the world’s most notable gathering of globalists, and at an exclusive Swiss ski resort no less, has left some scratching their heads.
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.
Davos is “not exactly a sympathetic audience” for Trump, according to William Allen Reinsch of the Center for International and Security Studies. “Walking into the lion’s den is an apt metaphor.”
Indeed, other government leaders attending Davos have lined up to poke holes in the Trump approach this week.
Picking up the threads of arguments outlined by the Indian, Canadian and German premiers, French President Emmanuel Macron on Wednesday acknowledged that globalist policies need to adapt to help those left behind.
But opponents to globalization should not hold everyone else back, he said, while welcoming Trump’s imminent arrival in an interview with Swiss radio.
“We spoke on the phone and I urged him to come to Davos, to explain his strategy and swim in these waters, to confront other ideas,” he said.
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.
“It is hard to predict whether the president will seek to reassure or provoke his audience in Davos,” said former treasury secretary Larry Summers, a Democrat.