Davos: 'Let's Not Hyperventilate' Over Protectionism, Says WTO Chief
At Davos, where rising global protectionism was a major concern, World Trade Organization Director-General Ngozi Okonjo-Iweala urged caution. "Could we chill?" she said, ahead of Donald Trump's closely watched video address.
Despite Trump's threats of tariffs on Europe, China, and Canada, financial markets remained relatively calm. Investors focused on Trump's actions rather than his rhetoric, with the dollar and yuan holding steady.
However, Chinese equities experienced volatility as investors braced for potential 10% tariffs on Chinese goods. The currencies of Canada and Mexico also declined after Trump's threats.
Economists and trade experts predict further action and increased volatility. Major Wall Street banks anticipate substantial tariff hikes, potentially raising the average US tariff rate from 3% to over 10%.
Despite the uncertainties, some US multinationals, including Alcoa Corp. and Volkswagen AG, expressed optimism about 2025, citing strong aluminum demand and potential growth.
Polestar Automotive CEO Michael Lohscheller adopted a "wait-and-see" approach, hoping that Trump's pro-business instincts would prevail.
Foreign leaders responded cautiously, with Mexico's President calling for calm and Canada indicating potential retaliation. European officials expressed a willingness to negotiate, while Asian countries sought dialogue and evaluated options.
China's tone in Davos was more conciliatory than in 2017. China Institute for WTO Studies Dean Tu Xinquan said that while China welcomed the lack of immediate tariffs, it remained prepared for the worst.