Davos Faces 'Trump 2.0'... Busy with Tariff and Security Measures

On the second day of the World Economic Forum (WEF, Davos Forum) on the 21st (local time), political and business leaders from around the world are focusing on the changes following the inauguration of U.S. President Donald Trump. While sighing in relief that no tariffs were imposed on the very first day of his presidency, they analyzed the shifts in the global economic and security landscape and sought ways to respond.

During his campaign, President Trump pledged to impose a universal tariff of 10-20% on all imports. Although he only announced tariffs of 25% on Canada and Mexico and 10% on China starting February 1, shortly after his inauguration, which was a narrower scope than expected, he introduced policies such as the establishment of a new foreign import agency.

Ursula von der Leyen, President of the European Commission, is delivering a speech at the World Economic Forum (WEF, Davos Forum) held in Davos, Switzerland, on the 21st (local time). Photo by Reuters Yonhap News

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Ngongi Okonjo-Iweala, Director-General of the World Trade Organization (WTO), said at the Davos Forum that day, "Tariffs do not help anyone in the world, not even the United States," adding, "We do not want a tariff war." She also expressed concern that inflation, which severely impacted major economies in 2023, could worsen again due to a tariff war.

Nikolai Tangen, CEO of the Norwegian Sovereign Wealth Fund, said, "Inflation will definitely occur due to tariffs," pointing to rising long-term interest rates, increased government debt, and geopolitical tensions as major risks to the market. Sergio Ermotti, CEO of UBS, also said, "Tariffs will not actually help reduce inflation," and "interest rates will not fall as quickly as people believe."

Countries made statements conscious of President Trump's potential re-election. Ursula von der Leyen, President of the European Commission, said, "For 25 years, Europe has relied on a surge in global trade for growth. We depended on cheap Russian energy and too often outsourced our security," adding, "But those days are over." She also emphasized readiness to discuss with the new U.S. administration, saying, "We are prepared to engage early to discuss common interests and negotiate."

Ding Xueshang, Vice Premier of China, which engaged in a trade war during Trump's first administration, emphasized, "Protectionism leads nowhere. There are no winners in a trade war." He warned, "If the world splits into multiple systems, unimaginable consequences will follow," and "No country will be free from harm." He added, "We do not seek a trade surplus," and "We want to import more competitive and higher-quality products and services to promote balanced trade." Although he did not directly mention President Trump, this is interpreted as a conciliatory gesture mindful of him.

Olaf Scholz, Chancellor of Germany, said, "The United States is our closest ally aside from Europe. We will use all means to maintain this relationship as it is," emphasizing, "To maintain our prosperity, we must keep our technological edge."

As President Trump pledged a swift end to the Russia-Ukraine war, changes in the global security landscape under the new administration were also a major agenda. Chancellor Scholz argued that Russian President Vladimir Putin should not win the war because he violated the international order of inviolable borders, stating, "The Ukrainian people must have the final say on how the war ends."

Volodymyr Zelensky, President of Ukraine, called the United States an indispensable ally but questioned whether President Trump would pay attention to Europe, see the need for NATO, and respect international organizations. He warned, "There is no sea dividing Europe and Russia," and "North Korean troops are fighting closer to Davos than to Pyongyang." He also referred to French President Emmanuel Macron's idea of a European peacekeeping force, arguing that "at least 200,000 peacekeepers are needed."

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