President Donald Trump enroute to Davos, Switzerland, to attend the World Economic Forum. Picture / AP
President Donald Trump enroute to Davos, Switzerland, to attend the World Economic Forum. Picture / AP
Team Trump stormed the fortress of the global elites on their first day in Davos, defiantly accusing foes of blinding the world with free trade humbug and abusing the international trade system.
The US economic cabinet said America has long been the victim of daily guerrilla warfare by trade hypocritesand is at last drawing its own sword in response, no longer willing to tolerate what it deems to be systematic gouging of the open US market.
"Trade wars are fought every single day: every single day there are always parties violating the rules and trying to take unfair advantage of things," said Wilbur Ross, the US Commerce Secretary. "So a trade war has been in place for quite a little while. The difference is, US troops are now coming to the ramparts."
Ross denied that President Donald Trump is retreating into commercial isolation, insisting that the blizzard of 84 separate trade measures, probes, and sanctions over the last year are a response to mercantilist abuses that have been tolerated for far too long.
"What has provoked a lot of the trade actions is inappropriate behaviour on the part of our trading counter-parties. Many countries are good at the rhetoric of free trade but actually practise extreme protectionism, and that is a problem the president is quite determined to deal with," he said, speaking at the World Economic Forum.
He said the US is invariably accused of protectionism whenever it tries to defend itself, but this is how others mask their own self-interest.
White House is deeply irritated over the way foreign leaders - China's Xi Jinping, India's Narendra Modi, and some of Europe's political class - pose as the defenders of free markets at the forum, when in reality they game the system in subtle ways with covert barriers, tax distortions or currency manipulation.
President Trump's team aims to turn the tables by pointing fingers and going on the rhetorical offensive. Yet it is an uphill task after the US was outflanked this week when 11 countries revived the Trans-Pacific Partnership (TPP) without the Americans.
Steven Mnuchin, the US Treasury Secretary, sought to play down the embarrassment, insisting that America is "open for business" and eager to forge bilateral deals on an equal footing.
"We absolutely believe in free and fair trade," he said.
You should also be aware to the degree that there is retaliation, there is the question of what does the US in turn do.
Mnuchin came close to inviting a further speculative attack on the US dollar.
"The dollar is one of the most liquid markets. Where it is in the short term is not a concern at all. Obviously, a weaker dollar is good for us as it relates to trade and opportunities," he said.
The comments sent the dollar index into a fresh tailspin, tumbling to a three-year low of 89.67 and breaking through the psychological barrier of 90. It touched US$1.2355 against the euro.
US Commerce Secretary Wilbur Ross says every day there are parties violating the rules and trying to take unfair advantage. Picture / AP
Wilbur Ross left little doubt that the coming weeks will be a stormy time for US trade policy, with talks over the North American Free Trade Agreement (Nafta) in danger of breaking down and a string of disputes with China coming to a head.
Washington kicked off this week with tariffs on solar panels and washing machines, to the fury of China and Korea. While acknowledging that China and other states may retaliate, Ross advised them to think twice.
"You should also be aware to the degree that there is retaliation, there is the question of what does the US in turn do," he said.
All sides suffer in a trade war, but the lesson of the Thirties is that those countries running a structural trade surplus ultimately suffer more.
