The European dominated WEF members who began their five day annual session on January 20 waited for the video session with the U.S. President on January 23 since the CEOs would be getting opportunities to get direct response from the U.S. President on their clarifications. They got it and amidst murmurs, the mood of the European CEOs was of despair and disenchantment. Europe is already facing its bleak economic period and it seems that the process will be prolonged.

He repeated his call for NATO countries to increase defense spending to 5% of gross domestic product (GDP). Noting that many nations did not meet the 2% GDP target until he challenged them, during his first term, Trump said: “It was only at 2% and most nations didn’t pay until I came along. I insisted that they pay, and they did, because the United States was really paying the difference at that time.”

He declared the US will begin “demanding respect from other nations”, singling out Canada and the European Union. He said Canada could “become a state” of the US, as a way of eradicating the US trade deficit with Canada. “We don’t need their cars and we don’t need their lumber.” On the EU, he said he believes the US has been treated “very, very unfairly” by the bloc. “They don’t take our farm products and they don’t take our cars. Yet they send cars to us by the millions,” he said.

He urged Saudi Arabia and the oil-producing cartel OPEC to cut oil prices, claiming this would end the war in Ukraine. “They should have done it long ago. They’re very responsible, actually, to a certain extent, for what’s taking place,” he said. The oil price took a tumble after Trump’s speech.

He said the US needs to double its energy production, partly to fuel artificial intelligence. Trump said he will fast-track the approvals for new power plants, which companies can site next to their plants – something not currently possible under regulations. Worryingly, he declared that companies will be able to fuel it with anything they want, and have coal as a backup, “good, clean coal”.

Trump’s return to the White House has sparked a wave of soul searching across Europe. His America First doctrine and threat of tariffs on EU goods have left Europe’s elite wondering how it can close the growing economic gulf with the US – and find the billions needed for extra military expenditure. The WEF is dominated by the European CEO’s. They have good relations with the U.S. companies. Many of them have production facilities in European countries leading to the generation of jobs and hiking GDP growth. Now Trump announced at the Davos meeting that the American companies will be charged for exports to U.S. of their goods produced in facilities in Europe. They have been asked to return to the U.S. and set up facilities in their home country.

If finally, this measure of Trump gets traction in Europe that will mean further hit to the already crippled economies of the European Union members. The European Commission already has a report prepared by former European Central Bank President Mario Draghi which says that productivity in Europe is ‘weak very weak” and there is immediate need for deeper integration and coordinated investment.

For 2025, the signals were already alarming but now Trump’s policy declarations have further worsened the emerging scenario. The International Monetary Fund has projected 2.7 per cent growth for the U.S. economy in 2025 against one per cent in Euro zone. Germany’s GDP has contracted for the last two years. The situation is uncertain as the national elections are scheduled on February 23. There is no guarantee that a stable coalition will be formed.

In countless conversations at Davos, business leaders and politicians laid bare the problems facing the EU: from stagnation in the core economies of France and Germany and failure to rival the American tech titans, to the rise of populism and the Ukraine war on its doorstep. The European Commission president Ursula von der Leyen was quite frank when she said at the Forum that’ In the last 25 years, Europe has relied on the rising tide of global trade to drive its growth. It has relied on cheap energy from Russia and Europe has too often outsourced its security. But those days are gone’.

This feeling that Europe will have to fend for itself in the Trump.2 years has been all pervasive in the Davos meet after Trump’s Thursday speech, but Europeans are proud and their CEOs still think that they have the best brains to take a turnaround, though Draghi’s report mentioned that EU companies have not been able to create a single 100 billion euro company from scratch in the last fifty years while the U.S. has built six worth more than one trillion euro companies during that period.

Next week, to meet Trump’s open challenge to Europe, The EC will be unfolding its roadmap for revival based on its own resources. The EC revamp programme includes setting up a saving and investment union so that 300million euro of EU families cash flows out of the continent annually , could be invested at home. A capital markets unions for preventing the flow of money and companies from Europe has also been under consideration. EU has at last woken up to the need for immediate action programme to combat Trump’s onslaught. Coming period will show whether it works. (IPA Service)