Yesterday Donald Trump gave an interview to the US financial channel CNBC at the World Economic Forum in Davos. Trump’s statements are a real treasure trove not only for his world view, but above all for the difference between statements and facts.
In the following we pick out a few statements from Trump that will probably be central to his election campaign this year.
Europe becomes the new China for Trump in the trade war
Trump makes it clear that now he is turning to Europe. He has concluded the Phase 1 deal with China. Specifically, the US president, a few minutes after the above-mentioned interview, said he would introduce 25% tariffs on EU cars if there was not a deal soon. According to Trump, this date must come very soon. Despite the election year, the US president will therefore set the same mechanism in motion as he once did against China.
In fact, however, the USA already has higher tariffs on EU cars in the relevant areas than vice versa, as we have already shown. The USA imposes tariffs on SUVs, light trucks (vans, pickups, etc.) as well as SUV mixes from Europe. They are taxed at 25% in the USA. In the USA, however, almost three times more SUVs, light trucks or SUV mixes are sold than “normal” cars themselves. This means: where the big margins and volumes are, the US already levies duties of 25% on EU vehicles. This is a severe disadvantage, especially for German car manufacturers. Ford and General Motors have been able to secure this market and continue to earn money unchallenged. lt is because they are protected by heavy duties. It would be useful if EU Commission President von der Leyen knew these figures in the upcoming negotiations.
When in doubt the Fed is to blame
If the US economy should get into trouble before the US presidential election, Trump blames the Fed. According to Trump, the Dow Jones would be 5000 to 10,000 points higher if the US Federal Reserve had not raised the key interest rate. The US GDP would then be at 4%, the US president said. This can be doubted, but so what?
Trump’s statements on taxes are particularly interesting: by lowering corporate taxes, according to the US president, the state would have collected even more taxes. That is simply wrong. Let’s first look at the US revenues from corporate taxation:
So the corporate taxes paid by US companies are clearly declining. Overall, however, not much has changed in terms of tax revenues. This is because it is obviously not the companies but the average US citizen who pays more taxes:
Now Trump wants to lower taxes for the average US citizen, as a kind of wild card for the election campaign. And, as Trump makes clear in the interview, he wants to make them pay with negative interest rates. Hence the attacks on the Fed, which Trump wants to get to lower interest rates into negative territory in order to make money on debt (like Germany, which the US president emphasizes in this context).
Since Trump took office, US government spending has skyrocketed. Contrary to what the US president had promised, there is no thought of reducing the debt burden:
With a tax cut for US citizens, the debt would increase drastically. Even negative interest rates compared to the loss of revenue due to tax cuts would only act as “peanuts”.
To sum up: Trump now wants to “bribe” the middle class to get re-elected. The US president is thus the prime example of how people are already consuming their future in the present. With the debt burden, interest expenditure on this debt increases. This money, however, is then lacking for productive investment, which in turn means less growth in the future. A vicious circle…
See here the statements of Trump at yesterday’s CNBC interview in Davos: