By Denny Gulino
THE WHITE HOUSE (MaceNews) – For monitors of macroeconomics, some positive fringes Wednesday to President Trump’s Davos sojourn, a digital tax framework deal worked out with France President Emmanuel Macron and a hint that Trump is ready to actually cooperate in a reform of the World Trade Organization.
If there is a chance there won’t maintain U.S. tariffs on European wine and a chance multilateralism and the WTO, slipping into paralysis because of the withheld U.S. approval of appellate judges, will survive after all then, the thinking goes, there is a chance Trump will keep delaying new tariffs on European auto exports, the tinder for a trade war that would have greater effects than the year and a half of the China fight.
“Roberto (Azevêdo. Director General of the WTO)) and I have a tremendous relationship,” Trump said in his final Davos news conference earlier in the day, “and we’re going to do something that I think will be very dramatic. He’ll be coming with a lot of his representatives to Washington sometime — maybe next week or the week after — and we’ll start working on it.”
Azevedo, next to Trump, replied, “I think it’s fair to say that we have been saying, for quite some time, that if the multilateral system, if the WTO is to deliver and perform its role in today’s global economy, it has to be updated.”
On Europe, Trump was similarly optimistic – sort of. There was optimism to be sure, but also the ominous reference to “something else.”
“We met with the world leaders — various world leaders, including the president of the European Commission, who we’re going to start negotiating a trade deal with,” he said, adding, “because the European Commission was, frankly, in many ways, tougher than China. I say that respectfully, but that’s the way it is. They’ve taken advantage for a long time.”
Trump went on, “And so we’re going to have a deal. I suspect we’re going to be able to make a deal. Otherwise, we’ll have to do something else.”
The least detail made available was what he and Macron discussed in the way of a resolution of the threat of a European tax on U.S. digital and social media revenues. Macron Monday had announced a suspension of a tax on 3% of digital product revenues in return for a freeze of U.S. plans to add tariffs on Fremch goods. However the UK and Italy are still threatening their digital tax.
Trump also raised eyebrows with an offhand comment that, “China is going to be purchasing more than $250 billion worth of goods from our country. That’s massive.” Since that total was $50 billion higher than any previous numbers there was widespread agreement about what he said next, “Those are numbers that nobody has ever heard of before.”
Trump returned in the evening from Davos to the White House, delayed because of bad weather en route, to wave to reporters and walk into the residence without comment. The picture is @macenewsmacro. However his tweets and retweets for the day appeared to set a new personal best, beating his previous all-time high in December when the House did its impeachment vote. A minority view among reporters was that he merely tied the record, but consensus was he set a new one.
Of course trade has receded into the news background as expected with the beginning of the Senate trial of Trump. But like the Terminator, it will be back as soon as the verdict is settled. Then analysts will be wondering if an acquitted president is emboldened to start another trade war, or becomes newly cautious and intensely aware of the approaching election so that he is more inclined to negotiate than to revert to being “Tariff Man.”
If somehow he is not acquitted, the political earthquake will keep generating enough aftershocks that trade will be off the news radar indefinitely, or at least until the dust settles and everyone begins to find out who is President Mike Pence, really.
Meanwhile trade ministers from Europe and Japan, South Korea, Taiwan, even Ukraine and beyond will have their “go” bags ready for quick trips to Washington as the possibilities emerge.
In the months ahead, after the USMCA is ratified by Canada and the “Phase One” China deal provisions are in effect, the size of bilateral trade deficits will be bigger news month by month, even though the criteria for Phase One adherence are fuzzier than they seemed at first and huge questions remain about who buys what and how much. Then, as often observed, as the year progresses the news cloud of elections 2020 will begin to obscure everything else.
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Contact this reporter: denny@macenews.com