Indian Prime Minister Narendra Modi delivered a paean to free trade Tuesday in a speech that formally opened this year’s gathering. Watch it here:
He took some swipes at Trump’s “America First” approach in the process, declaring that “instead of globalization, the power of protectionism is putting its head up.” Yet Trump’s trade hawks have been quietly building a case that Modi’s government is engaged in precisely the sort of unfair trade practices that the leader decried.
The administration’s maneuvering on India, led by U.S. Trade Representative Bob Lighthizer, has paled by comparison to the brewing fight with China. Trump fired what could prove the opening salvo of a trade war with the Chinese on Monday (though he denies it) by slapping tariffs on imported solar panels and washing machines. The United States ran a $24 billion trade deficit with India in 2016, a fraction of our $347 billion imbalance with China that year, though the figure has more than doubled over a decade.
American businesses across a range of sectors have lodged a long list of complaints about their treatment by Modi’s government: Harley-Davidson faces a 100 percent import duty there; Apple just got pinched by a hike in the tax on imported phones; General Electric says India demanded midstream changes to a multibillion-dollar contract to build diesel locomotives; medical device makers are subject to price controls; and American purveyors of everything from flowers to alcohol confront steep tariffs.
Lighthizer pressed the case last year, raising concerns directly with Modi when the prime minister visited Washington in June and then in a trade forum with India in October that yielded no apparent progress. At the end of the year, as Lighthizer’s office remained conspicuously silent, Congress allowed a law that waives tariffs on imported goods to lapse. India is the prime beneficiary, tapping it to export $4.7 billion worth of goods to the United States in 2016, according to USTR.
A USTR representative declined to comment about Lighthizer’s plans to follow up in Davos, as did a Commerce Department spokesman. A White House spokesman said only that Trump has no plans to meet with Modi at the conference.
National Economic Council Director Gary Cohn has tried to hold the line internally against the trade hawks and on Tuesday sought to clarify Trump’s approach. “America First is not America alone,” he said. “We are very open to free, fair, reciprocal trade … It’s hard to argue against that, that we should treat each other equally.”
Trump’s tariff smackdown seemingly threw Modi’s free-market appeal, delivered to the global elite, into sharper relief. But it came as India considers setting up its own barriers to Chinese solar panels: The nation’s Finance Ministry this month pitched imposing a 70 percent duty on imports of the goods.
“While Modi himself is well-liked by the private sector because he’s so much more business oriented than his predecessors, there’s still a lot of skepticism,” Eurasia Group President Ian Bremmer writes in an email.
Bremmer adds that although the United States has a deeper strategic alignment with India than with China, the latter is better positioned to stand up for itself, which could shape how the trade fights play out.
“The U.S. has more leverage on these economic issues with a country like India than it does with China. If the U.S. tries to lash out at China, China is going to hit back hard. India doesn’t have the same type of economic firepower,” he said. “Ultimately, size matters in this case.”
Back at home Tuesday, Cohn argued at the White House lectern that Trump had "unleashed the U.S. economy" with his economic agenda, including slashing corporate tax rates. “At the [WEF], we will reiterate America's commitment to domestic and global economic growth and prosperity, strengthen close ties with other world leaders, and catalyze international business support for the president's agenda,” he said.
But a peek at the message Cohn and Trump may deliver when they hit town came through when the Goldman Sachs alumnus argued that “the president will continue to promote fair economic competition, and will make it clear that there cannot be free and open trade if countries are not held accountable to the rules.”
Cohn, along with national security adviser H.R. McMaster, revealed more details about the president's trip to Davos, saying that Trump arrives Thursday morning and will meet with WEF founder Klaus Schwab, who will host a reception for Trump on Thursday night. Trump will meet with "a variety" of world leaders and dine with European business executives ("to encourage them to continue to invest in America.")
From McMaster: “The President will also use his time in Davos to discuss other national security issues, including the international effort to denuclearize the Korean Peninsula, our coalition to defeat ISIS, our efforts to counter Iran's destructive agenda to perpetuate violence across the greater Middle East, as well as Iran's ballistic missile activity, and the fundamental flaws in the Iran nuclear deal.” McMaster mentioned sessions with British Prime Minister Theresa May, Israeli Prime Minister Benjamin Netanyahu, Rwanda's President Paul Kagame (also the head of the African Union); and President Alain Berset of Switzerland.
Parting shot: When asked what Cohn, a Davos veteran, would surprise Trump about attending the infamous gathering for the first time, the president's top economic adviser simply pointed to the "14 feet of snow” on the ground here. “And I've never seen 14 feet of snow there, either. So, it will be interesting to see.”
PROGRAMMING NOTES: I'm in Davos to cover all the action this week, so The Finance 202 will be hitting your inboxes at 6 a.m. Swiss time (12 a.m EST) today through Thursday, and Friday morning after Trump's speech. If you're attending, tell me what you're seeing and hearing — and pass on any questions, concerns and complaints (and of course noteworthy sightings). Please email me at email@example.com. And if you're not signed up for my newsletter, please do so here.
Washington Post Executive Editor Martin Baron will host a panel at 6:15 p.m. local time (12:15 p.m. EST) on “The Global Impact of America First.” Panelists include Alfonso María Dastis Quecedo, Spain’s minister of foreign affairs and cooperation; Luis Almagro, secretary general of the Organization of American States; Khemaies Jhinaoui, Tunisia’s minister of foreign affairs; Robert D. Kaplan, senior fellow at the Center for a New American Security and author of books on foreign affairs; and Jin Keyu, associate professor of economics at the London School of Economics and Political Science. Catch the event on The Post's live stream here.
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— Trudeau announces major trade deal. The Post’s Heather Long: “Hours after the Trump administration announced its first major tariffs on imported washing machines and solar panels, Canadian Prime Minister Justin Trudeau told a global audience that his country had just reached a historic trade deal with 10 Asia-Pacific countries. The symbolism from Canada was clear: When it comes to trade, the rest of the world is ready to move forward without President Trump.
‘Today is a great day for Canada but it is also a great day for progressive trade around the world,’ Trudeau said …[he] called the new deal the CPTPP, which stands for the Comprehensive and Progressive Trans-Pacific Partnership. The name was a reminder that Canada and other nations went forward with the Trans-Pacific Partnership (TPP) after Trump pulled out a year ago. The withdrawal from TPP was one of Trump's first acts as president. At the time, experts warned that leaving TPP probably would mean the United States would be outflanked on trade.”
— #MeToo campaign hits the forum as part of a sexual harassment panel: the Guardian’s Graeme Wearden and Nick Fletcher:
- Winnie Byanyima, the head of Oxfam International, said: “All the women in the world should be grateful to American women for taking a stand and saying, ‘Me Too.' "
- Dacher Keltner, professor of psychology from the University of California, said: “Men tend to take more risks, they tend to be a lot more aggressive, and they tend to sexualise thing[s]. So if you give a man power, those default tendencies will be expressed.”
- Peggy Johnson, executive vice president for business development at Microsoft, says the younger generation “is helping to force change. She explains that her daughter recently started her career, and told her that ‘when there’s an inappropriate joke at work, I don’t laugh.' ”
The New York Times has the full video from Tuesday’s Panel on “Gender, Power and Stemming Sexual Harassment” that’s worth checking out.
Tiffany Hsu writes for the Times: “Panelists spoke about millennials demanding transparency and accountability from future employers, about social media amplifying and empowering whisper networks and about the need for organizations of all sizes and types to elevate more women into leadership roles. 'This is not an issue that one sector can challenge and tackle and resolve,' Maryam Monsef, Canada’s Minister of Status of Women, said of the need to work across various industries and governments. 'The only way we’ll get there is if it’s a cross-sectorial approach.' "
As of Tuesday afternoon, here's the latest list of Trump officials on their way here:
— Trump headed to CEOs reception: Bloomberg News’s Shannon Pettypiece and Jennifer Jacobs: “[Trump] plans to attend a reception with top corporate executives from the U.S. and Europe [in Davos] this week ... The details of the Thursday night event, which will be hosted by [WEF] and include officials from other governments, are still in flux, according to the person. The White House also plans to hold its own event for dignitaries and has already sent invitations to some CEOs, two other people familiar with the plans said …
The event will be part of a broader push by Trump to make a pitch to CEOs and business leaders to add jobs in the U.S., touting lower taxes and cuts to regulations his administration has put in place over the past year, said one of the people.”
— Change of plans: No more Melania. CNN’s Kate Bennet reports: “First lady Melania Trump, in a change of plans, will not be joining President Donald Trump on his trip to [WEF] later this week. East Wing communications director Stephanie Grisham confirmed to CNN that the first lady's decision to forgo the trip was based on ‘scheduling and logistical issues.’ A week ago, Grisham told CNN the first lady would be attending the annual meeting of influential financial leaders and business titans in a show of support for her husband, who intends to give remarks during his visit.”
— Conway teases Trump’s “America first” speech: “This is President Trump and he is completely unafraid and in fact very willing and eager to go into different countries and different situations where you have many different countries represented … Davos is no different. Expect this president to go there and show what 'America First' continues to look like on the world stage,” White House adviser Kellyanne Conway said in a Tuesday interview with Fox Business Network. “He is certainly willing to engage on trade and participate in the global economy. However, he has made it very clear that it will always benefit Americans: American workers, American interests and our American allies.”
— Trump’s tax cuts get high marks (in Davos, anyway): CNN Money’s Alanna Petroff: “Top chief executives in Davos are heaping praise on changes to the United States tax code pushed through by [Trump]. The consensus at [WEF], which kicked off on Tuesday, is that the tax overhaul will boost U.S. growth and increase investment.
‘There are companies all around the world who are looking at the U.S. now and saying, 'This is the place to be in the developed world,' said Blackstone (BX) co-founder Stephen Schwarzman, who chaired Trump's economic advisory panel until it was dissolved in August after a series of resignations. ‘There are going to be a lot of flows into the United States,’ he added …. Credit Suisse (CS) CEO Tidjane Thiam said that businesses will now look to do more deals in the U.S. ‘Tax reform in the U.S. has been exactly what we needed . . . to give a new impetus to world growth,’ he said. ‘I do believe that the positive impacts of that are underestimated.’ ”
— Not so much for Trump’s tariffs: Bloomberg’s Catherine Bosley: “The new U.S. tariffs on solar panels and washing machines are ‘wrong’ and won’t help the American economy, Nobel laureate Joseph Stiglitz said. ‘It’s bad for the global environment, it’s bad for the American economy, it’s bad for jobs in the United States,’ the Columbia University professor told Bloomberg Television’s Francine Lacqua and Tom Keene in [Davos] … Whether the move will derail the broad global recovery will depend on China, to a large extent. While the country has voiced displeasure, saying the tariffs were a ‘misuse’ of trade measures, that initial response is relatively temperate.”
Cohn defended the tariffs in the White House press room on Monday, noting the president allowed a “bipartisan” process to occur and made a careful decision on both washing machines and solar panels. Trump, Cohn said, “cares enormously about growing the economy and keeping the economy on the right track, and making sure that our consumers have the best opportunity possible. But he also cares very much about the workforce in the United States.”
— Talking Brexit. The Guardian’s Larry Elliot: “Ángel Gurría, the head of one of the West’s leading think tanks and one of the most prominent supporters of remain during the E.U. referendum campaign, has said it is time to move on and ensure that Brexit is a success. ‘We have no choice,’ the secretary general of the Organisation for Economic Cooperation and Development said in an interview with the Guardian at [WEF]. ‘We have to take action and make it as smooth as possible.’ Gurría said Britain would retain close links with the E.U. despite the vote to leave in June 2016. ‘There is a nearness and a closeness, 40 years of living as part of the same family. That doesn’t disappear with the stroke of a pen or because of a referendum.’”
BBC’s Kamal Ahmed: “Norwegian Prime Minister Erna Solberg has told the BBC that Britain should push for a ‘soft Brexit’ and that close ties to the European Union (E.U.) are very important for the U.K. and the European economy.”
— Trump is making post-Davos plans with Macron: CNN’s Michelle Kosinskin: [Trump] is expected to invite French President Emmanuel Macron to Washington for an official state visit later this year, the first of his presidency, according to two diplomatic sources. While a date for the visit has not yet been officially set and the White House has not made an announcement, sources say that could come as soon as this week, while Trump attends [WEF] … Trump is the first president in decades to not host a state visit during his first year in office. The White House has said there's no particular reason for the delay.”
— Protesters broke through security cordons to demonstrate against Trump. Reuters’s Michael Shields and Fedja Grulovic: “Anti-capitalists marched through Swiss cities on Tuesday to protest a planned visit by [Trump] to [WEF] and broke through a security cordon in Davos. Leftist organizers called for the protests under the mottos ‘Trump Not Welcome’ and ‘Smash WEF!’ …
About 20 demonstrators broke through security to reach the Davos Congress Centre, holding banners and shouting ‘Wipe out WEF’ before they were peacefully disbanded by police. “Trump is just one of the other people we disagree with. We’ve been protesting every year now against the World Economic Forum, and if Trump comes or not we don’t care. Trump is just, maybe he’s just the best symbol of this world,’ protester Alex Hedinger told Reuters TV in Davos.”
From BuzzFeed's Ryan Broderick:
— Bloomberg’s Simon Kennedy recaps his top five takeaways from Tuesday's sessions:
- Doomed to repeat 2006? Kennedy explains how the top finance executives at WEF are warning investors not to repeat the mistakes from 2006. Carlyle Group’s David Rubenstein’s somber warning: “Generally, when people are happy and confident, something wrong happens.’’
- Shockwaves from Washington: Reverberations abound regarding the Trump administration's decision to impose tariffs on solar panels and washing machines.
- The decline of the West: “Booming markets or no, the financial crisis has had a lasting impact on who’s hot and who’s not in the Swiss Alps,” Kennedy writes. “Wavering Western powers have been supplanted by China and now, India.”
- Plaudits for European Central Bank’s Draghi: “For years, the European economy was the sick man of Davos,” he writes. “Credit was given to European Central Bank President Mario Draghi. ‘Europeans should take our key man insurance on him because when he goes, a real giant will have gone because he’s done an incredible job,’’ said [Carlyle’s Rubenstein].
- News from Uber: Uber CEO Dara Khosrowshahi used the forum as a platform to announce the embattled company would be profitable within three years.
You may have heard it's snowing -- a lot -- here.
Here's how CNN International used the snow to explain some of the main topics at the forum:
— Where in the world is Wilbur? Early Tuesday, Commerce Secretary Wilbur Ross was a no-show for a panel on which he was scheduled to speak about global manufacturing and geopolitical tensions, my colleague Danielle Paquette reports. Ross would have been joined by Australian and Japanese business leaders but was replaced by Argentina’s minister of production, according to a forum employee who didn't want to be identified.
It was unclear what delayed Ross's arrival. From the Commerce Department’s media team came an auto-response: “Due to the lapse in congressional appropriations, we may not be able to respond to your inquiry in a timely manner because a very limited number of staff in the Office of Public Affairs will be working during the government shutdown.” (No further response by late Tuesday afternoon to The Post's inquiries.)
Americans here were particularly curious to see Ross following a report from Axios that Trump believes his commerce secretary has “lost his step” and that he tends to fall asleep in meetings. “Maybe he’s still asleep,” one attendee in the Davos Congress Centre quipped.
Ross, who has handled some of the Trump administration’s trade negotiations with China, has one more spot on the official Davos schedule. He’s supposed to appear Wednesday on a panel about “surging anti-globalization sentiment” with the director-general of the World Trade Organization, according to forum organizers.
Look who did make it... via BuzzFeed's Miriam Elder:
MEANWHILE IN WASHINGTON:
— Senate confirms Powell for Fed chair. The Post's Jeff Stein: “The Senate overwhelmingly confirmed Jerome H. Powell as the next chairman of the Federal Reserve on Tuesday, voting 85 to 12 to give President Trump's nominee a four-year term as one of the world’s most powerful stewards of the global economy. Powell, a current Fed governor and former financial firm executive, will replace outgoing Fed Chairwoman Janet L. Yellen, whose term ends in February.
First appointed to the Fed board in 2012 by President Barack Obama, Powell is expected to largely continue Yellen's policies — a contrast from other candidates Trump considered who had criticized the Fed under Yellen for its focus on low interest rates and economic stimulus.”
Here are some of the highlights from Davos of events you might want to attend (all times local):
- Brazilian President Michel Temer is scheduled to speak on Wednesday.
- French President Emmanuel Macron is scheduled to speak on Wednesday.
- German Chancellor Angela Merkel is scheduled to speak on Wednesday.
- Italian Prime Minister Paolo Gentiloni is scheduled to speak on Wednesday.
- British Prime Minister Theresa May is scheduled to speak on Thursday.
- Argentinian president Maricio Macri is scheduled to speak on Thursday.
- President Trump is scheduled to speak on Friday.
- An interactive panel on global arms markets begins at 9 a.m. in Congress Centre, Situation Room.
- A lunch session on “China: Open Up for Prosperity” starts at 12:30 p.m. in Hotel Derby.
- A lunch session on disaster resilience in infrastructure will start at 12:30 p.m. in Morosani Schweizerhof, Arvenstube.
- A session on big data in policy making in Congress Centre, Science Hub starts at 12:45 p.m.
- A workshop on building sustainable economic systems will begin at 2:30 p.m. in Congress Centre, Atelier.
- A session on life-work balance will begin in The Loft, Sayaban at 3:15 p.m.
- An interactive panel on a shared vision for financial inclusion will begin at 3:30 p.m. in Congress Centre, Jakobshorn.
- A televised session on systemic trade collapse will begin at 4:45 p.m. in Congress Centre, Aspen 2.
- A session on shaping the fourth industrial revolution will begin at 5 p.m. in Congress Centre, Forum Hub.
- A televised session on the global impact of “America First” will begin at 6 p.m. in Congress Centre, Aspen 2.
- An interactive panel on the intelligence market will begin at 9 a.m. in Congress Centre, xChange on Thursday.
- A televised session on the remaking of global finance will begin at 11 a.m. in Congress Centre, Sanada on Thursday.
- A televised session on new avenues for global trade will begin at 1 p.m. in Congress Centre, Aspen 2 on Thursday.
- A session on the big picture on trade will begin at 2:45 p.m. in Congress Centre, Global Situation Space on Thursday.
- A dinner session on “The State of the World with Nobel Laureates in Economics” will begin in Central Sporthotel at 8 p.m. on Thursday.
- An interactive panel on famine and food security will begin at 9 a.m. in Congress Centre, Situation Room on Friday.
- A televised session on the future of Asian economics will begin at 9:15 a.m. in Congress Centre, Aspen 2 on Friday.
- An interactive panel on the state of startups will begin at 9:15 a.m. in Congress Centre, Aspen 1 on Friday.
- A session on the rise of women entrepreneurs will begin in Congress Centre, xChange at 10:45 a.m. on Friday.
- A lunch session on the business of Brexit will start at 12:30 p.m. in Morosani Posthotel, Davoserstube on Friday.
- An interactive panel on the global economic outlook will begin at 1 p.m. in Congress Centre, Congress Hall on Friday.
- The closing concert in Congress Centre, Congress Hall will begin at 5:30 p.m on Friday.
Justin Trudeau announces a new trade deal with Asia:
Female colleagues are separated from male ones as Vice President Pence visits the Western Wall in Jerusalem: