European Commission President Ursula von der Leyen, speaking at the World Economic Forum in Davos a day after Donald Trump’s inauguration as the 47th president of the United States, warned against a “new era of harsh geostrategic competition” that would see nations reach ever more frequently for the protectionist levers of sanctions, export controls and tariffs. File photo by Gian Ehrenzeller/EPA-EFE
Jan. 21 (UPI) — The World Economic Forum in Davos, Switzerland, was dominated Tuesday by the arrival of a second Trump administration amid ominous warnings over the new president’s decision to pull the United States out of the Paris climate agreement, for a second time, and potential trade wars.
European Commission President Ursula von der Leyen warned in a speech that the world had entered a “new era of harsh geostrategic competition” that would see nations resort ever more frequently to the protectionist levers of sanctions, export controls and tariffs.
But she said it was critically important to balance the desire to safeguard economic and national security against the ability to innovate and build prosperity.
“In this spirit, we will need to work together to avoid a global race to the bottom. Because it is in no one’s interest, to break the bonds in the global economy. Rather we need to modernize the rules to sustain our ability to produce mutual gain for our citizens,” von der Leyen said.
Highlighting new trading partnerships agreed with Switzerland and Mexico, along with Brazil, Argentina, Bolivia, Paraguay and Uruguay bringing 400 million Latin Americans together with 450 million Europeans, von der Leyen said the deals were possible because “what you see is what you get.”
“We play by the rules. Our deals have no hidden strings attached” and while others were only interested in exporting and extracting, the EU wanted to see the local industries of its trading partners flourish, she said in what appeared to be thinly veiled criticism of Donald Trump’s transactional approach to international relationships.
Von der Leyen pledged that Europe would stay the course prescribed by the Paris Agreement and keep working with all nations that wanted to protect nature and stop global warming because it remained “the best hope of all humanity.”
With climate change and energy security “top of the global agenda,” she vowed Europe would double down on its efforts with a new plan to be announced in February to “complete our energy union, so that clean power can run freely across our continent, and bring prices down for all Europeans.”
However, noting the $1.55 trillion in EU-U.S. two-way trade — almost a third of the global total — including American LNG making up half of all EU gas imports, von der Leyen said early engagement with the new administration would be a priority.
Chinese Vice Premier Ding Xuexiang also used his address to advocate in favor of globalization, arguing it was not a “you lose, I win zero-sum game,” but a system that benefitted all.
“Admittedly, economic globalization will bring some tensions and disagreements on distribution. These issues can only be resolved in the process of promoting economic globalization. Protectionism leads nowhere. Trade war has no winners,” he warned.
China is one of Trump’s principal targets for proposed tariffs — as much as 60% — along with Mexico and Canadian imports at 25%, as a tool to boost tax revenues and secure more favorable trade terms.
However, business leaders’ reactions were mixed with warnings on one side that tariffs posed one of the pressing market risks because they would push up inflation and on the other, some European CEO’s hailed Trump’s promised red-tape bonfire and pledge to boost domestic oil and gas production as a “shot in the arm” for U.S. corporates.
“I don’t think I should give any advice to the U.S., but if you look at the risk to financial markets, I think inflation is for sure one, all driven by tariffs,” Norges Bank Investment Management CEO Nicolai Tangen told CNBC.
“Many of the suggestions now coming out of the U.S. are potentially inflationary. They could cause more inflation. There could be less labor supply, there could be more tariffs — all of these things are driving inflation, and so it’s not a given that inflation will come down,” said the head of Norges, one of the world’s largest Sovereign Wealth Funds.
But Ericsson CEO Borje Ekholm said Europe should ditch its “regulatory-first approach and emulate America’s hands-off stance.
“I don’t think you can be [a] frontrunner in regulation, I don’t think that creates value,” he said. “Where you have to be frontrunner is innovation, you need a framework that supports innovation. That’s where the U.S. has been really successful — Europe needs that.”
Earlier, two Greenpeace International activists staged a protest inside the main Congress Center demanding higher taxes on the wealthy after oligarchy comparisons were made of Trump’s new administration due to the inclusion of so many billionaires and tech titans.
“Tax the Super-rich! Fund a Just and Green Future”, read a banner unfurled on a balcony above the entrance hall.
“As the world faces increasing threats to democracy through the collusion of wealth and power, the urgency to tax the super-rich is ever increasing,” said Greenpeace spokesperson Clara Thompson.
“Having billionaires in positions of leadership, governing with impunity, is a stark reminder of the dangerous intersection of extreme wealth and politics, and its impact on democracy, people and the planet.”
On Sunday, Fight Inequality, an alliance of activists from 15 Asian, Latin American and African nations went further projecting a giant 1,300-foot message onto a mountainside near where private jets land in Davos calling for a end to tax breaks for billionaires and featuring the faces of Trump, Tesla and X CEO Elon Musk and Meta CEO Mark Zuckerburg.
“It’s time to tax the super-rich, invest in public services, fight the climate crisis and end crony capitalism,” read the message.
The gathering of some 3,000 business leaders and 60 heads of state, which runs through Friday, is expected to be joined by Trump will participate in the proceedings via a live link from Washington.
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