
Davos saw new excitement this year. The annual jamboree of world corporate and political leaders, who meet in the scenic Swiss alpine village annually, got a taste of the new world order as defined by Donald J Trump. The US is no more interested in leading the world through crisis and turmoil. It is ‘America First’. Self-interest will be the watchword. If you help the US get fatter and richer, you are an ‘ally’. If you don’t, well.. you are ‘enemy’, ‘terrorist’, or ‘tariff-worthy’. Take your pick.
Trump did not make it to Davos; he was virtually there on the big screen. And world leaders tripped over each other to hear him. When he spoke, he drew heavy applause.
But his message to Davos and the world was tough stuff. The carrot and the stick, but mostly the stick. He said he would lower taxes within US borders to 15 from the current 21 percent, to help crank up production and business at home. For the world elites, there was a warning: “…if you don’t make your product in America, which is your prerogative, then very simply you will have to pay a tariff.”
The third step: lower energy costs. In other words: drill, baby, drill. The US, already the largest oil producer, would swamp the world with higher output; and Trump believes he can make a deal with OPEC to abandon production cuts. These steps would reduce energy prices, leading to cost of living becoming cheaper in the US.
And finally: with inflation under control, Trump would demand the Federal Reserve lower interest rates, which would reduce borrowing costs for businesses and consumers.
Will ‘Trumpism’ work?
All this ‘America First’ may sound great, but it may not work. Slashing corporate tax rates does give business an initial boost – Trump had brought down corporate tax from 35 to 21 percent in his first innings; but in the long run, the learning is productivity does not increase proportionately to make up for the loss in tax revenue, burdening the government with heavy deficit. Similarly, higher tariffs being threatened against Canada, China and the rest of the world will boomerang back on US importers of goods, who will then pass on the hit to US consumers. This could then stoke inflation and slow down the US economy.
Super power intervention by the US, Russia or China anywhere in the world is always for self-interest. It may be couched in the principles of philanthropy, but the end goal is colonialism is some form. In Trump’s world, the gloves are off. The soft language is gone, and realpolitik will be brutally defined and implemented.
Nowhere is US’ retreat into ‘Fortress America’ more explicit than in the areas of Climate change and health security. Among Trump’s first decisions was to announce the US’ withdrawal from the 2015 Paris Climate accord. This is the second time. He had earlier pulled the plug in 2017. This could have serious ramifications for a world struggling with global warming and adverse climate events. Parties to the climate talks have fixed environment saving targets to be met by 2035. By pulling out of the Paris Accord, Trump wants to be free to develop his ‘dirty’ energy plans.
In another executive order on the first day of office, Trump signed out of the World Health Organization (WHO) leaving both the US and the world more vulnerable to infectious diseases and public health threats. Pandemics such as those triggered by the Covid-19 can be only tackled with a global strategy. The withdrawal signals not just cutting off US funding, but a weaker unified response to health care challenges.
New bloc emerging
Some European leaders at Davos pushed back on Trump’s abandoning the world’s climate agenda. EU’s executive head, Ursula von der Leyen, called the 2015 Paris accord “the best hope for all humanity” and vowed: “Europe will stay the course.” But many of the reactions seen at Davos were skittish or play-it-safe.
What is significant is the emergence of a pro-Trump bloc. In his 2017 round, Trump was an outsider. This time there’s a small but vocal group amplifying his politics.
The loudest at Davos was Argentinian president Javier Milei who praised Trump and his allies – Italian prime minister Giorgia Meloni, Israeli’s Benjamin Netanyahu, Hungarian PM Viktor Orban and El Salvador’s President Nayib Bukele. Milei said Argentina was “re-embracing the idea of freedom” and “that is what I trust President Trump will do in this new America”.
There was a jarring note from the left wing. For all the wealth being promised and created, income inequality had become more pronounced, it said. Before Ursula Van der Leyen spoke, climate activists unfurled a banner over the main Davos Congress Center atrium that read, “Tax the super-rich! Fund a just and green future.”
The British charity Oxfam, in its annual report released just before Davos said: Billionaire wealth grew by $2 trillion in 2024 alone, equivalent to roughly $5.7 billion a day, at a rate 3 times faster than the year before. An average of nearly 4 new billionaires were minted every week. Meanwhile, the number of people living in poverty has barely changed since 1990.