(Bloomberg) -- US President Donald Trump said he would ask Saudi Arabia and other OPEC nations to “bring down the cost of oil,” casting the push for more crude output as a way to heighten pressure on Russia and help end the nearly three-year war in Ukraine.
“If the price came down, the Russia-Ukraine war would end immediately,” Trump told world leaders gathered in Davos, Switzerland, on Thursday. “Right now, the price is high enough that the war will continue.”
Trump’s entreaty for more production comes as fresh sanctions on Russian supplies that were imposed days before he took office have begun to bite. And though oil immediately fell in response to Trump’s comments, it’s not clear the Organization of the Petroleum Exporting Countries will heed the president’s call, given the cartel’s cautious moves so far to slowly unwind production cuts imposed in 2022.
Stocks headed toward all-time highs after Trump’s remarks. The drop in oil, which tends to ease concerns about inflation, pushed the two-year yield down.
Beyond oil, Trump used his remote address before the gathering of finance and business chief executive officers, central bank governors and political officials to air other economic grievances, criticizing European Union sales taxes he said treat the US “very badly” and accusing banks of unfairly bypassing some conservative clients.
Trump also reiterated his threat to use tariffs to bring manufacturing back to the US, delivering a stark warning to European executives in the room: “If you don’t make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff, differing amounts, but a tariff which will direct hundreds of billions of dollars, and even trillions of dollars into our treasury.”
Trump also said he would demand an immediate drop in interest rates, which he said ratcheted up deficits and resulted in what he cast as “economic chaos caused by the failed policies” of his predecessor, Joe Biden.
“Over the past four years, our government racked up $8 trillion in wasteful deficit spending and inflicted nation-wrecking energy restrictions, crippling regulations and hidden taxes like never before,” Trump said.
Federal Reserve Chair Jerome Powell, who faced frequent barbs from Trump during the president’s first term, has said the central bank will make its decision based on what’s best for the economy and independent of political considerations or pressure.
While presidents have traditionally refrained from directly commenting on the central bank’s policy making, Trump told Bloomberg News during the campaign that he should be able to tell Powell how he thinks interest rates should change.
Trump’s oil push Thursday is hardly the first time the Republican has sought to pressure OPEC; he repeatedly encouraged the cartel to adjust output during his first term in office.
In his remarks, Trump expressed dismay that the Saudis and other OPEC nations had not acted sooner to help pare oil prices, arguing that doing so would shrink inflation and allow for the reduction of interest rates.
Yet there are big obstacles to any increase in production by the cartel, which has spent years seeking to bolster prices by curbing output. Higher prices also are seen as key to help Saudi Arabia balance its budget.
Representatives of OPEC didn’t immediately respond to requests for comment on Trump’s remarks.
In the US, Trump has vowed to “drill, baby, drill” and unleash domestic energy production. But oil executives have shown little appetite to dramatically boost output as they focus on shareholder returns.
Trump appeared virtually at the forum — on a video feed that showed him behind a podium, flanked by a jumbo-sized image of the seal on the president’s Resolute Desk in the Oval Office. The video feed of Trump hovered over the executives on stage at the panel.
Trump hailed commitments by companies to invest in the US, touting plans by SoftBank Group Corp. to help build artificial intelligence infrastructure and a promise from Saudi Arabia’s Crown Prince Mohammed Bin Salman to expand investments and trade with the US by $600 billion. Trump said he would pressure the crown prince to raise that figure to $1 trillion.
After delivering opening remarks, Trump took questions from World Economic Forum President Borge Brende and a select group of executives, who included Blackstone Inc.’s Stephen Schwarzman, Bank of America Corp.’s Brian Moynihan, TotalEnergies SE’s Patrick Pouyanne and Banco Santander SA’s Ana Botin.
“I’m sure the crown prince of Saudi Arabia will be really glad you gave this speech today,” Schwarzman joked.
EU Taxes
Even though Trump addressed the gathering virtually, his return to power has dominated the annual meeting, being received with both enthusiasm from some quarters and concern about policies ahead.
Trump last spoke at the forum in 2020, addressing CEOs in person only weeks before the Covid-19 pandemic shut down the world’s economy. He used that appearance to confront European leaders and urge them to compromise in trade talks or risk crippling levies.
This term, the president has vowed to usher in a “golden age” for the US, moving to crack down on undocumented migration and reiterating plans to hit neighboring Mexico and Canada with tariffs. He’s insisted levies on China and the EU remain on the table, citing regulatory burdens and billions in taxes from European countries he cast as targeting American tech firms.
Energy Flow
In response to a question, Trump also vowed to guarantee US energy supply security to Europe, where businesses face high energy costs and leaders are worried about keeping companies competitive globally.
“I would make sure that you get it. If we make a deal you’ll get it,” Trump said.
Domestically, Trump has moved to undo Biden-era policies designed to fight climate change, while also boosting US fossil fuel production and filling up depleted oil reserves. He has also ordered his administration to consider eliminating subsidies and policies favoring electric vehicles. And he’s moved to restart permitting of LNG export projects meant to supply European and Asian countries.
European leaders have been rankled by Trump’s decision to pull the US out of the Paris climate agreement — although the move was widely expected.
Trump touted his domestic policies, including a national energy emergency, as crucial to lowering costs and boosting developing technologies such as artificial intelligence.
“We’re going to build electric-generating facilities,” Trump said. “Under emergency declaration, I can get the approvals done myself without having to go through years of waiting.”
Russia’s War
During the campaign, Trump said he would bring a halt to Russia’s war even before taking office. On Thursday, asked if there would be a peace deal before next year’s Davos forum, Trump put the onus on Russian President Vladimir Putin.
“You’re going to have to ask Russia,” Trump said. “Ukraine is ready to make a deal.”
Trump said he was hopeful China could intervene to help broker peace between the two countries, saying they “had a great deal of power over that situation.” The US president also suggested he was willing to make guarantees about nuclear weapons to assuage concerns expressed by Putin.
In the US, Trump has been cheered by many of Wall Street and Silicon Valley’s most prominent executives, won over by his economic agenda despite anxiety over the impact of tariffs and immigration crackdowns. That shift is also evident at Davos.
World leaders, both ideological allies and those more critical of his worldview, have come around to the reality that he’ll be their counterpart for the next four years and they must find a way to engage him.
--With assistance from Hadriana Lowenkron, Skylar Woodhouse, Akayla Gardner and Grant Smith.
