Trump, tariffs, and a showdown in Davos: World leaders brace for US president

As world leaders descend on the World Economic Forum, all eyes are on Donald Trump, whose arrival is imminent. ITV News Business and Economics Editor Joel Hills reports from Davos.

President Trump’s pursuit of Greenland – and his aggressive trade policy – are threatening to strain relations across the Western Alliance.

There’s not much positive to say about tariffs. Taxes on imports tend to push up prices, reduce trade and slow economic growth.

Trump has already raised tariffs to their highest level since the 1930s.

Protesters dressed in clown costumes poking fun at the US president were also in attendance in Davos. / Credit: AP

As of yet, it’s hard to see serious damage, but it’s also hard to find any evidence that tariffs have boosted American manufacturing in the way he promised.

For the UK, this is a real concern. The Chancellor, who is due to attend the World Economic Forum in Davos on Tuesday, had hoped that last year’s trade agreements with the Trump administration had restored a degree of calm.

If Trump follows through on his latest threats, it would act as a brake on the British economy at a time when the government is desperately trying to revive growth and improve living standards.

The Chancellor Rachel Reeves is set to arrive in Davos on Tuesday. / Credit: PA

But this is not just Britain’s problem.

European leaders are trying to work out how to handle President Trump when he arrives at the World Economic Forum this week.

No one wants to jeopardise trade with the United States, and everyone knows Europe depends heavily on American military power – not least in Ukraine.

So far, the strategy has been to placate, appease and flatter.

And yet Trump continues to behave as if he can tear up the rules and impose his will on countries that are supposed to be his allies – without consequences.

Tonight, the Financial Times reports that the European Union is considering retaliating, either by imposing tariffs of its own or by restricting access to the EU market for some American companies.

The hope is that Trump will back down.

The reaction of investors tomorrow morning could also prove decisive.

Last April, the bond and stock markets reacted so strongly to the tariffs Trump proposed that he was forced into a rapid retreat.