Donald Trump swept into Davos last week amid a blaze of publicity and anticipation. The controversial US president was in the snowy Swiss resort to deliver a speech on trade at the annual World Economic Forum.
It was widely leaked ahead of his arrival that the Tweeter-in-Chief would adopt a characteristic “America First” tone in the address and it was reported that could potentially instigate a new trade war. While he did indeed drive home that protectionist theme, the approach was more statesman-like, more measured, than many had been expecting.
That said, there are major global concerns about the Trump administration’s economic policies. These include proposals to take action against China on the theft of intellectual property, possible tariffs on steel and aluminum, and the threat of the US withdrawing from the North American Free Trade Agreement, among many others.
The global business and political elite in Davos were, say many commentators, generally left unimpressed – but not surprised – by Trump’s stance on trade. But, I believe, that it is unlikely to launch a trade war. More likely a trade tantrum.
And such a tantrum could be the perfect environment for Asia to leapfrog the US. As the world’s largest and most influential economy seems determined to step away from globalization and look inward – Wilbur Ross, the US secretary of commerce, flagging up that punishment tariffs can be expected – and the rest of the world does the opposite, this can only lead to America’s international influence dimming.
Filling the gap
It was clear at Davos that Asia is increasingly stepping up to the plate and preparing to fill the gap that’s going to be left by a reduction of American presence.
Indian Prime Minister Narendra Modi highlighted his country’s economic buoyancy and how increasing – and very welcome – foreign investment will further strengthen its growth rate. Similarly, in his speech, Pakistani Prime Minister Shahid Khaqan Abbasi extolled the virtues of investment flows into his country. China, too, talked of its push to embolden its links with international trade and commerce institutions and networks.
All this is happening against a backdrop of the decision by 11 nations, mostly in Asia, to ratify a revised Trans-Pacific Partnership, which underscores how the region is distancing itself from the new America model.
In short, Davos brought into sharp focus something that has been brewing since Trump took power: The momentum of global trade and commerce, the vision of expansion, and the appreciation of openness, now appears to lie more in Asia than in the US.
There is a sense of a major imminent sea-change for the global economy. The tides might not change overnight, they might not happen for a few years, but change they will – away from a US-dominated agenda – if things remain as they are today.