European finance ministers express concern about trade war

DAVOS (TIP): President Donald Trump arrived in Switzerland on Thursday, January 25, to attend the World Economic Forum where he will push his “America First” agenda and seek more fair, reciprocal trade between the United States and its allies, amid concerns of the European finance ministers about an imminent trade war.

Trump, never invited as a businessman, will be the first US president to attend Davos since Bill Clinton in 2000, giving him a chance to mingle with the same elite “globalists” he bashed in the 2016 election campaign.

Meanwhile, a day after sending the dollar reeling with comments supportive of a weak US currency, US Treasury Secretary Steven Mnuchin said the Trump administration was not seeking a trade war but would defend its economic interests.

At a news conference at the World Economic Forum in Davos, Mnuchin played down his comments on Wednesday, January 24, that a weaker dollar was “good for us as it relates to trade and opportunities”, saying they had been “balanced and consistent”.

The remarks were seen by markets as departing from traditional US currency policy and elicited thinly veiled warnings from European finance ministers, as US President Donald Trump arrived in Davos to promote his “America First” agenda.

“I thought my comment on the dollar was actually quite clear yesterday,” Mnuchin told reporters. “I thought it was actually balanced and consistent with what I’ve said before, which is, we are not concerned with where the dollar is in the short term.” Mnuchin said there were “both advantages and disadvantages of where the dollar is in the short-term” and stressed that the US wanted fair economic competition.

“We want free and fair and reciprocal trade. So, I think it’s very clear. We’re not looking to get into trade wars. On the other hand, we are looking to defend America’s interests.” But the finance ministers of France and Italy expressed concerns about Mnuchin’s remarks, which pushed the dollar down to multi-year lows. A stronger euro, hovering at a three-year peak against the dollar, could hurt the European economy by making its exports less competitive. It also risks complicating the European Central Bank’s exit from years of ultra-loose monetary policy.

“We want currency levels to reflect economic fundamentals,” French Finance Minister Bruno Le Maire told reporters in Davos. His Italian counterpart Pier Carlo Padoan said Mnuchin’s comments reminded him of American policy in the 1970s and expressed concern about a trade war.

(Source: PTI)