Abu Dhabi, UAEThursday 27 February 2020

Trump at Davos 2020: Ignore the prophets of doom, America's economy is great again

With his impeachment trial set to begin in Washington, US President largely shied away from environmental issues

US President Donald Trump touted the success of the US economy in Davos on Tuesday, dismissing "perennial prophets of doom" on climate change to an audience that included Greta Thunberg.

With his impeachment trial set to begin in Washington, Mr Trump largely shied away from environmental issues, which are top of the agenda at the annual gathering in Switzerland of business leaders for the World Economic Forum.

He did not refer directly to Swedish activist Ms Thunberg, 17, who responded to his speech by referring to "empty words and promises" from world leaders.

"You say, 'Children shouldn't worry, don't be so pessimistic' and then nothing, silence," she said in her latest high-profile duel with the US president.

Mr Trump said the US would join an initiative to plant a trillion trees, but spent several minutes of his speech hailing the economic importance of the oil and gas industries.

After days of uncertainty over whether he would attend the meeting in Davos, especially while his impeachment trial in the US is under way, he arrived in the Swiss Alps on Tuesday.

It was the second time Mr Trump has taken the stage at the WEF meeting. Two years ago, he urged companies to invest in America after passing the first tax cuts to encourage business spending.

This year, he stuck to the theme. In a wide-ranging address promoting the achievements of his administration despite his unorthodox approach, Mr Trump picked up on some of the themes from 2018.

He thanked overseas companies for investing in the US and said it was on far better economic standing than he had imagined when he took office three years ago.

"The time for scepticism is over," Mr Trump said as he invited more foreign money. "To every business looking for a place to succeed, there is no better place than the US."

His address was squarely aimed at a domestic audience despite the international setting, said Carlos Pascual, IHS Markit’s leader on geopolitical analysis and a former diplomat.

“First of all one has to look at this speech as a speech to the American public,” Mr Pascual said.

“It is not a speech to the international community, it is not a speech to the Davos community.

"It is picking the location of Davos, seen as the centre point of international engagement and the international elite, as a place where he can come and he can say to the American public, ‘I demonstrated to them that I have made America great again, that we have revitalised our economy, that we have created jobs, that we have tackled inequality and that we did it our way with the vision I had and on our terms’, and not in the way that the international community saw as the traditional path to economic growth.”

Mr Pascual said that the speech indicated Mr Trump would prefer to fight for re-election mainly on an economic platform.

“His belief is that his strongest point is the injection of dynamism that has been put into the US economy, particularly after tax reform and the infusion of capital in both companies’ and individuals’ pocketbooks," he said.

"And that by arguing on those terms, that’s his best prospect to be re-elected as president.”

The tax reforms have solidified support from Mr Trump’s Republican Party base, Mr Pascual said.

His message to independent voters, particularly the lower-middle class who have traditionally been part of the Democratic Party, has been that he has stood up to China, Mexico and Canada on trade, thus creating more jobs.

“Whether that message is fully true or not is another issue," Mr Pascual said.

"And it is a lot easier to say the positive than to give the reverse argument” on what the trade deals struck with those countries mean for American workers.

Mr Pascual said the China phase one trade deal, for example, avoided any direct pain to consumers but there was the risk of an indirect effect on jobs in sectors such as agriculture.

The president’s speech seemed to lack appetite for more trade conflict with China or European countries, and Mr Pascual said that this was a sound strategy.

It would allow Mr Trump to claim success and run for re-election “on the laurels of that success”, without reigniting any fresh uncertainties about economic growth in an election year.

Mr Pascual is a former US ambassador to Mexico and Ukraine. The Mexico posting was under Barack Obama.

Updated: January 22, 2020 07:51 AM

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