Trump's Daily Verbal Bombs: "Tariffs if Not Made in the US... Lower Interest Rates and Oil Prices"

Attending Davos Forum via Video

Aiming at the Fed: "Demand Immediate Rate Cut"

To OPEC: "Lower Oil Prices to End War"

Hinting Retaliation to EU for Big Tech Regulation

Oil Prices Drop 1%... US Bonds Steady

President Donald Trump of the United States announced in his first speech upon returning to the international stage on the 23rd (local time) that "tariffs will be imposed if products are not made in America." He warned the European Union (EU) that there could be retaliatory measures if they regulate American big tech. He also pressured oil-producing countries and the Federal Reserve to lower oil prices and interest rates, respectively.

In a video speech at the World Economic Forum (WEF, Davos Forum), President Trump stated, "Come to America and make your products," adding, "Otherwise, you will have to pay tariffs of various amounts." He further threatened to lower the current U.S. corporate tax rate from 21% to 15%, stating, "The 15% rate will only apply if products are made in America."

He also raised his voice against the European Union (EU) for regulating American big tech. President Trump mentioned the fines imposed by the EU on Apple, Google, and Meta, saying, "They should not do that. It is a kind of tax."

There is an interpretation that President Trump's mention of EU fines as 'a kind of tax' is related to his announced 'tax retaliation' policy. On the 20th, President Trump announced that if other countries impose discriminatory taxes on American companies, the U.S. would apply double the tax rate to companies from those countries within the U.S. He also argued that NATO member countries should raise their defense cost sharing from the current 2% of GDP to 5%. Additionally, he stated, "I will demand Saudi Arabia and OPEC to lower oil prices," arguing that "if oil prices go down, the Russia-Ukraine war will end immediately."

The crude oil market reacted immediately. On this day, the February contract for West Texas Intermediate (WTI) closed at $74.62 per barrel, down 1.09%.

He also pressured central banks around the world to cut interest rates. He said, "If oil prices fall, I will demand an immediate rate cut," adding, "The world should lower interest rates." When asked by reporters at the White House if he would talk to Jerome Powell, the Fed Chairman, to lower rates, President Trump replied, "I will do so at the appropriate time." When asked how much he wanted rates to fall, he said, "A lot."

Since his first administration, President Trump has repeatedly pressured Powell, whom he appointed, to cut rates.

Unlike the crude oil market, the bond market remained calm. As of midnight, the 10-year U.S. Treasury bond was trading at 4.65%, up 0.04 percentage points. Barron's analyzed that "the U.S. President has limited authority to pressure or replace Fed officials," and "such pressure statements are unlikely to be effective in lowering rates." In a Federal Open Market Committee (FOMC) meeting in November last year, Chairman Powell firmly stated that he would not resign even if Trump (then President-elect) demanded it.

In an interview with Fox News, President Trump hinted at the possibility of a new trade agreement with China. When asked if he could make an agreement with President Xi Jinping to establish fairer trade practices, he said, "I can," adding, "because we have something they want. It's tariffs."

Reporter Kim In-yeop inside@hankyung.com