WEF observers: Protectionism harms global trade patterns

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The World Economic Forum (WEF) annual meeting sets off on Monday, marking the stage for a week-long series of discussions on global economic challenges, geopolitical shocks, energy transition and other international affairs in Davos, Switzerland.

The same day as the world economic leaders gathered in Davos, Donald Trump was sworn in as the 47th president of the United States. The question of how the new American leadership will reshape global norms and the prospects for relations between the world's largest two economies have emerged as central topics on the WEF's agenda.

It is worth noting that ahead of Trump's inauguration, protectionist sentiments against China had been rising within the White House, with tariff threats, the ban on TikTok and trade barriers against Chinese electric vehicles as the latest examples. But decoupling is, apparently, not what the international community is happy to see.

"The rest of the world hopes there won't be a decoupling between the U.S. and China," Mina Al-Oraibi, the editor-in-chief of The National, said in an exclusive interview with CGTN at Davos. "It is clear that China is not only a rising power, but a significant one. As has historically happened, the current superpower wants to limit that rise, so we see with the U.S., there has been a concerted effort to try to limit China's rise, especially its technological advancement."

Upon his assuming office, Trump, although did not impose day-one tariffs on China, has ordered his administration to address so-called "unfair" trade practices. For WEF participants, tariffs are believed as only counterproductive.

"A (tariff) is really not helpful at all for China and that makes things even worse," Patrick Foulis, foreign editor at The Economist, who is also attending the WEF, told CGTN, noting that China has the ability of restarting its economy. "In large majorities, Americans recognize that tariffs will increase the prices of goods," Sam Jacobs, the editor-in-chief of TIME, said at the WEF.

Washington's decoupling tendency is also affecting globalization. "That (protectionism) cannot work at a time where the U.S. is also the main supporter of capitalism. Capitalism and market need open borders. There is not only a decoupling problem, but there is also a global problem in terms of where the world economy can go, if you're going to have protectionism on the rise," Al-Oraibi said.

Within hours of his inauguration, Trump signed an executive order to keep TikTok online in the U.S. for 75 days and said that tariffs on China could hinge on a deal over TikTok's ownership. While Trump pledged to impose levies of 25 percent on Canada and Mexico from February 1, his anti-China tariffs were held off.

This is within the expectation for a pragmatic politician like Trump. "I think President Trump wants to see America in a leading position, but also not one that is getting into unnecessary fights," Al-Oraibi noted.

During his first term in office, Trump had been adept at using tariffs as a trade negotiation tactic in handling with countries where the U.S. has large trade deficits. The businessman-turned-politician is highly likely to continue his pragmatic approach in handling trade relations with others.

According to the WEF's latest Chief Economists Outlook, protectionism was identified as the factor most likely to drive lasting changes to global trade patterns. "We could see states of emergency declared on various things, including trade," Foulis stated, adding that foreign exchange markets are already adjusting in preparation for the implementation of U.S. tariffs.

For many observers at the WEF, protectionist measures could create higher costs, burden customers and harm the global economy. As trade barriers start spreading all across the world, how to break down the barriers and foster mutual trust is perhaps the prime consideration for global leaders.

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