Trump wins Davos raves for ‘landmark’ tax cut

Davos, Switzerland | AFP | Instead of a chilly reception from globalisation’s defenders, US President Donald Trump may find a warm welcome in the posh ski resort of Davos, from global executives delighted with his controversial tax reform.

The annual World Economic Forum in the snow-bound Swiss resort is a bastion of globalisation and expectations were high that Trump’s presence, set for Thursday and Friday, would likely be a bad-tempered affair given the tycoon’s zeal for protectionism.

But last month, Trump’s embattled presidency pulled off a rare victory, passing a law through the Republican-led Congress that permanently slashes the corporate tax rate to 21 percent, fulfilling a long-term wish of US CEOs.

Opposition in the US has been fierce against the reform, seen as a handout to the wealthy, and even angered governments in Europe who see it as an unfair lure by Washington to bring multinationals back to its shores.

But in Davos, Trump’s reform was hailed by many as putting the US back in the driver’s seat of the world economy.

“There are companies all over the world that are saying that (the US) is the place to be in the developed world,” gushed billionaire Stephen Schwarzman, chief executive of investment management giant Blackstone, and a Davos regular.

“Lower taxes, reverse of regulation, a workforce that is educated… to non-US people (this tax reform) is a very big deal,” Schwarzman said on a panel alongside other major heavyweights from the global economy.

Brian Moynihan, chairman and chief executive of Bank of America, noted the “enthusiasm I heard just last night from a bunch of people from outside the United States”.

“They think that the United States is the thing to talk about for the next 12 to 18, 24 months… That will be an interesting dynamic for a while,” he said.

One of Europe’s most high-profile CEO’s concurred: “I’ve learned over time not to bet against the US economy,” said Credit Suisse CEO Tidjane Thiam, a Franco-Ivorian considered to be close to France’s leader Emmanuel Macron. “It’s not a winning strategy.”

– ‘Absolute genius’ –

It wasn’t supposed to be this way.

Last year’s edition of the Davos gab-fest took place just as Trump was sworn into office, with the forum-goers gobsmacked as they watched the historic scene on televisions.

But executives said the fall-out and concerns from the political earthquake never quite materialised, at least for now.

“I think they’ve subsided…” Mark Weinberger, accountancy giant EY’s Global Chairman told CNBC in Davos. He underlined the importance of the tax reform, calling it a “landmark change”.

All this contributed to a warming attitude towards Trump and the US, he said.

“Remember, last year, coming in, we had, right off the heels of Brexit, right off the heels of Donald Trump… many elections that people were worried about, in France, in Germany, and Austria. That’s all now behind us,” Weinberger said.

Not all voices were unanimous, however, with Frank Appel, the chief executive of Deutsche Post AG, warning that the tax reform could well be just a “sugar high” that could dangerously swell the US deficit.

The IMF’s Christine Lagarde included this warning when, speaking from Davos on Monday, she upgraded the US growth forecast for this year to 2.7 percent, thanks to the purely “short-term” effects of tax cut.

The head of Oxfam, the British aid group that serves unofficially as capitalism’s chief critic at Davos, came down hard on Trump and described what she saw as the real purpose behind his policies.

The Trump presidency is “a very good example of … where the super rich take over the control of government and then use it for their own benefit,” Winnie Byanyima, Oxfam Executive Director, told AFP.

Amongst the executives, most super wealthy, the effect of the Trump tax cut remained evident.

“In a few years, we might say that Trump is an absolute genius,” one high-profile attendee said, on condition of anonymity.