GES President Dennis Snower on Donald Trump’s Plans for the U.S. Economy
At the World Economic Forum in Davos, GES president Dennis Snower was interviewed by the Deutsche Welle News on Donald Trump’s plans for the U.S. economy. He expressed his concerns about Trump’s policies regarding tariffs, potential trade wars, and the U.S. – German relationship.
Imposing Tariffs Is Like Running a Wall in a Factory
Being asked about Robert Stieglitz’ remark that Donald Trump lacks macroeconomic understanding, Dennis Snower, President of the Kiel Institute for the World Economy, concurs:
“I agree because he [Trump] wants to impose tariffs and tariffs are simply inappropriate in today’s world because every good is produced in many countries. So, imposing a tariff is like running a wall through a factory, it is a hindrance to everyone. It does no one any good. And the other thing is, Trump does not understand that there are many global problems that require international cooperation and therefore the last thing we need is nationalism at this point.”
Economy in Danger of New Boom-Bust-Cycles
On Trump’s promises of tax cuts and deregulation and the response of business leaders, Snower warned: “Business leaders like to hear that and business leaders are not necessarily thinking about the long run. But the U.S. economy is growing strong the moment, and if Trump stimulates it further, then we are back to boom-bust-cycles, and that is not in the interest of society and not in the long-term interest of business, either.
Snower continued also to be cautious about potential trade wars:
“I think he [Trump] is playing with fire. If he threatens to impose tariffs on firms for not locating in the United States, then, in fact, does impose tariffs at some point, there may be retaliation. If other countries retaliate, he might retaliate, that could escalate, there might be a trade war.
Germany Must Be On Collision Course with Trump’s Promises
As a result of Trump’s economic policy, Snower sees a risk not only for the U.S. – German relationship.
“I think it could harm this relationship, and by harming this relationship it could do harm to other relationships the United States have. And thereby, begin an age in which the US is less important economically in the world.
Germany is interested in long term stability, fiscal stability, sustainable growth and so on. Trump has shown little sensitivity for that, and Germany has no option but to be on collision course with what Trump has promised and hope that Trump does not live up to his promises.”