Trump Looms

Davos ends on cautious note

  • Why it matters

    Why it matters

    Global leaders at the World Economic Forum in Davos are concerned over what a Trump presidency will bring. Germany is closely following any impact on global trade, but its finance minister is doing his best to appear calm.

  • Facts


    • The U.S. is Germany’s biggest trading partner and one in four German jobs depend on exports.
    • The Davos meeting of the global elite was overshadowed by the election of self-described outsider Donald Trump and his unclear policies.
    • Trump vowed to impose import taxes on German carmakers but Germany’s finance minister points to America’s duty to international trade treaties.
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Schaeuble German Minister of Finance attends the WEF annual meeting in Davos
Germany's Finance Minister Wolfgang Schäuble reminds the incoming U.S. president that he is bound by international treaties. Source: Reuters

As the global corporate and political elite gathered for the last day of this year’s World Economic Forum in the idyllic Swiss town of Davos, discussions over what the future might hold all evolved around an event some 4,200 miles away in Washington: The inauguration of the 45th president of the United States, Donald Trump.

Throughout a week of talks, global leaders have scrutinized many of the world’s big crises: From Britain’s decision to leave the European Union to the turmoil in countries such as Syria, Ukraine and Turkey. But no topic dominated the debate as much as the uncertainty over the policies of the new U.S. president.

With Germany’s particular focus on foreign trade, officials and companies in Europe’s largest economy are especially concerned over any indications that global commerce might take a back seat under the new president.

The election of a capricious Mr. Trump, who has so far failed to flesh out clear-cut policy proposals and provided often contradictory information to markets, allies and foes alike, made for some guesswork Friday as the summit’s final panel debated what’s in store for 2017.

The global elite gathered in the Swiss mountains seemed powerless when it came to answers to the rise of populists. But they could agree on the threats.

“I am a little uncertain over what will happen this year,” an unusually restrained German Finance Minister, Wolfgang Schäuble, told listeners during a panel discussion with Christine Lagarde, the head of the International Monetary Fund. The panel, under the banner of the “Global Economic Outlook,” typically marks the end of the Davos gathering with a look at what’s in store for the year ahead.

The global elites gathered in the Swiss mountains, confronted with the rise of populists from outside the political mainstream, appeared powerless throughout the week when it came to drawing up an answer to the anti-globalist sentiment that seems to have taken hold.

What they could agree on, were the threats. Significant disruptions are in store if countries disconnect themselves from the global trade market and instead impose local tariffs, abolish regulations and lower taxes, Ms. Lagarde said. But she added that things so far looked more upbeat than expected.

Germany, one of the world’s top exporters, with goods and services worth $1.26 trillion shipped across country borders in 2015, is on high alert. After all, the country’s top recipient of exports is the United States.

But despite Mr. Trump’s pledge to introduce hefty border taxes for goods produced abroad and imported into the United States, Mr. Schäuble doesn’t believe in a complete turnaround.

“The United States have also signed international treaties,” the minister, known for his at times hawkish tone on fiscal policy, said in an interview at the conference with Germany’s Der Spiegel. “I don’t believe a big trade war will break out tomorrow. But we will of course insist on agreements being observed,” Mr. Schäuble said.

Asked about Mr. Trump’s well-known habit of issuing policy proposals via 140-character tweets, Mr. Schäuble brushed off concerns. “You can’t confuse Trump’s style of communication for government policy statements,” he said. “We won’t react to that.”

Earlier this week, Mr. Trump directly attacked German carmakers in an interview with the German tabloid Bild, expressing disapproval for BMW’s plans to build a new plant in Mexico and warning the German automaker could face a 35 percent import duty for cars not built in the U.S.

Mr. Trump went on to criticize Germans’ reluctance to buy U.S.-made cars, calling it “very unfair” that nearly no American cars could be found on German streets, while in turn “everybody has a Mercedes-Benz parked in front of his house [on Fifth Avenue in New York City].”

With German automakers wary of the threats, Mr. Schäuble did not hold back his opinion on the matter.

“If Trump really wants to dictate to Americans which car brands they should buy, I wish him the best of luck,” Mr. Schäuble said. “That is not in line with my idea of America. And I doubt it is in line with his.”


Kirsten Ludowig and Torsten Riecke are correspondents with Handelsblatt, reporting from the World Economic Forum in Davos. Kathrin Witsch, Daniel Schäfer and Tina Bellon contributed to this article. To contact the authors: and ,

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