Donald Trump Speaking at Davos, Part 1: "Open for Business"

Donald Trump arriving at Davos

President Donald Trump traveled to the resort town of Davos, Switzerland to speak at the World Economic Forum. It had been many years since an American president has attended the forum, which is often considered to be the ultimate globalist conclave. Mr. Trump seemed to have several aims: to tout the "America First" theme that took him to his 2016 electoral victory, to reassure jittery trade partners about his intentions, and, most prominently, to highlight the United States' strong economic performance under conservative policies. This was a tough policy mix to work into one speech, since Davos tends to be very pro-trade, and Mr. Trump's foreign policy, which has highlighted attacks against the Trans-Pacific Partnership (TPP), which he called a "rape of our country," and the North American Free Trade Agreement (NAFTA), is highly protective. German investment executive Stephan Gemkow correctly noted that Mr. Trump's speech "had a very strong domestic focus" and expressed regret that he did not speak "more about international, multilateral aspects." No kidding! Mr. Trump was talking to the home front.

Trump's theme was, first and foremost, America First. For the most part, he was thinking of his voters, not the world leaders. If we think of an audience as the people to whom the speaker is reaching out, which may not be the people actually in the room, Mr. Trump's audience was mostly his voting base of conservative, isolationist voters, not the world leaders who were actually present. He could count on the mass media to take his message back to the U.S.A. He began: "I'm here to represent the interests of the American people and affirm America's friendship and partnership in building a better world." He quickly turned to the "extraordinary strides" that he said the United States had made: "Were lifting up forgotten communities, creating exciting new opportunities, and helping every American find their path to the American dream." In a thinly veiled swipe at President Barack Obama, he claimed that, "After years of stagnation the nation is once again experiencing strong economic growth." He boasted of the climbing stock market and job creation. He noted low unemployment among American minority groups.

Although these claims were factually questionable, which I'll talk about later today, they were clearly aimed at a domestic audience who voted for Mr. Trump in hopes of seeing economic progress. He attributed this growth to conservative policies: tax cuts and reduced regulation.

Reaching out to the international audience, Mr. Trump boasted that "There has never been a better time to hire, to build, to invest, and to grow in the United States. America is open for business and we are competitive once again." But he protested against "predatory" trade practices such as "intellectual property theft, industrial subsidies, and pervasive state-led economic planning." He said that he welcomed trade with the TPP nations, but on better terms. He ended with a plea for unity: "Today, I am inviting all of you to become part of this incredible future we are building together."

Mr. Trump could not embrace Davos' free trade agenda without forsaking his America First voting base. Since free trade is, as virtually all economists agree, very beneficial to most (but not all) people, he could not abandon free trade without harming the economy. The speech tried to bridge the gap. He could not solve the underlying contradiction between free trade and protectionism, and his policy mix therefore remained incoherent. Still, as the first United States president in decades to speak at Davos, Mr. Trump reached out to world markets and seemingly tried to crack open a few doors to the world economy. His main message, however, was, from start to finish, to reassure his conservative domestic voters that he continued to place America First. This was a political speech first, and only incidentally a world leadership speech. 

Image from WhiteHouse.gov