Both German chancellor Olaf Scholz and Chinese vice premier Ding Xuexiang have warned the new, Donald Trump-led U.S. administration not to engage in a trade war.
Speaking at the World Economic Forum in Davos on Tuesday, January 21st, German chancellor Olaf Scholz said he would “defend free trade as the basis of our prosperity.”
Chinese vice premier Ding Xuexiang took a similar position, telling the World Economic Forum that no country would emerge victorious from a trade war. He added that a “tug of war” was underway between supporters and opponents of economic globalisation.
China has also been locked in trade disputes with the European Union. The EU imposed hefty tariffs on electric cars made in China last year. In turn, Beijing targeted European brandies and opened probes into EU subsidies of some dairy and pork products. Without mentioning the EU or any country by name, Ding warned against “erecting green barriers that could disrupt normal economic and trade cooperation.”
During his election campaign, Trump threatened tariffs and taxes on trade partners, and in his inaugural address on Monday, January 20th, said he could impose 25% tariffs on Canada and Mexico as early as February 1st.
Trump has vowed to impose 60% tariffs on goods from China, after launching a trade war with the country during his first stint at the White House. No such announcements were made on Monday, but both Beijing and the European Union are bracing themselves for impact.
Speaking at Davos, Scholz also voiced the need for Europe and the United States to maintain their close cooperation which “is essential for peace and security worldwide,” and a “driver for successful economic development.” He argued that the two global powers had coordinated closely to support Ukraine, which is fighting a war with invading Russia.
But the leader of Europe’s biggest economy—who is set to be displaced as chancellor following German national elections in February—also argued that “we Europeans must be strong in our own right.” He urged the EU to strengthen its defence capabilities, make weapons procurement more efficient, and develop a European arms industry.
Scholz also called for Europe to become more competitive, “not solely as a reaction to developments in China, or the presidential elections in the U.S,” but because “we’ve seen the rise of serious competitors in all parts of the world, in Asia, Africa and the South of America.” Echoing European Commission President Ursula von der Leyen, he said, “Our companies need better financing options and capital for innovations,” therefore it is important to make substantial progress when it comes to deepening the capital markets in the EU.
In the wake of Trump’s return to the White House, Ukrainian President Volodymyr Zelensky—also speaking in Davos on Tuesday—said Europe should develop a joint defence policy and be willing to increase spending to ensure it can guarantee its own security.
In contrast with his predecessor, Joe Biden, Donald Trump has made it clear he would provide less support for Ukraine, saying he wants to end the war as soon as possible with a possible peace deal.
Zelensky questioned whether Trump was committed to NATO and European security. “Will President Trump even notice Europe? Does he see NATO as necessary? And will he respect EU institutions?” Zelensky asked in the speech, which called for Europe to become more self-reliant.
While Trump has indeed lambasted Europe for not spending enough on defence, and threatened to withdraw the U.S. defence umbrella provided by NATO if European members of the military alliance don’t “pay their bills,” it was actually under Trump’s first tenure as president that European countries significantly increased their defence budgets.
