Trump's Davos Speech: The Good, the Bad, and the Ugly
President Donald Trump doubled down on both domestic deregulation and protectionism in his speech to the World Economic Forum.
President Donald Trump spoke virtually to global business leaders and politicians at the World Economic Forum's annual meeting in Davos, Switzerland, on Thursday. His remarks covered a wide range of topics, from artificial intelligence to Ukraine, but they were mostly focused on economic policy.
To realize the "golden age of America," Trump declared, he must confront the "economic chaos" of the last administration. He promised to reverse "energy restrictions" and "crippling regulations," and he complained about $8 trillion "in wasteful deficit spending" under President Joe Biden. (The national debt increased by more than $7 trillion during the first Trump administration.)
Trump promised to lower the 21 percent federal corporate income tax to 15 percent, which he described as "about as low as it gets, and by far the lowest of a large country." A corporate income tax of 15 percent indeed would make the U.S. more attractive to businesses than such spots as China (where the rate is 25 percent) or Japan (just over 23 percent).
Trump touted his regulatory freeze, promising to "eliminate 10 old regulations for every new regulation," and he pledged to lean heavily into fossil fuel production, which he claimed would "reduce the cost of virtually all goods and services." The price of energy and the extent of regulation contribute to production costs; decreasing both, coupled with lower tax rates, will indeed make American companies more productive and profitable, and their products cheaper.
Trump also welcomed $600 billion worth of Saudi Arabian investment and said he'd ask "the crown prince…to round it out to around $1 trillion." Indeed, Trump values foreign investment in the American economy so highly that he wants to force it: He threatened the CEOs in attendance with unspecified tariffs if they don't produce in the U.S.
That wasn't the president's only plunge into protectionism. He bemoaned billions of dollars of trade deficits with the European Union, Canada, and Asian countries, and he told Canada: "If you're a state, we won't have a deficit. We won't have to tariff you." (If that sounds confused to you, you're right.) Trump failed to recognize that imposing tariffs on intermediate and final goods will raise the cost of living for Americans, contradicting his promises to reduce it.
Trump also offered some comments on monetary policy. After blaming the Biden administration for "the worst inflation crisis in modern history," he said he would "demand that interest rates drop immediately." Higher interest rates, of course, are one of the Federal Reserve's primary tools for combatting inflation.
In short, the economic vision Trump presented to Davos is a mixed bag. Hopefully he'll spend more time removing regulations and lowering corporate taxes than hiking tariffs and, in so doing, effectively taxing Americans.
