SCOTT DETROW, HOST:
This week marks one year since President Trump was sworn in. Year 2 begins with more major tensions with traditional allies of the U.S. Tomorrow, in Davo, Switzerland, Trump will meet with his European counterparts, and the meeting comes as Trump threatens them with new tariffs unless they help the U.S. take over Greenland, a Danish autonomous territory. In a moment, we will talk to two NPR correspondents about Trump's latest economic threats and how they fit into the pattern of his first year in office. But first, reporter Willem Marx is already at the World Economic Forum in the Swiss Alps, where talk is swirling around something once viewed as unthinkable, a possible end to the transatlantic relationship.
WILLEM MARX, BYLINE: The relationship between the United States and its allies reached a complicated, and some have said, critical moment in recent days. Along Davos' slushy main street, the Promenade, where almost every hotel, restaurant and cafe is bedecked in the bright logos of giant global corporations, capitalism looks to be king. Yet, President Trump's latest threats of tariffs tied to Greenland on eight European nations seem to seriously undermine the free market trade traditions this annual meeting has so long celebrated. The French president, Emmanuel Macron, started his speech here Tuesday with some sarcastic humor.
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PRESIDENT EMMANUEL MACRON: It's a time of peace, stability and predictability.
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MARX: He turned serious soon enough, though.
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MACRON: It's ever a shift towards a world without rules, where international law is trampled underfoot and where the only law that seems to matter is that of the strongest. And imperial ambitions are resurfacing.
MARX: Macron's speech was - to borrow a French phrase - a cri de coeur, or cry from the heart, in defense of multilateralism and a rallying call against U.S. unilateral action and the use of force, whether military or economic.
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MACRON: Without collective governance, cooperation gives way to relentless competition - competition from the United States of America through trade agreements that undermine our export interests, demand maximum concessions and openly aim to weaken and subordinate Europe, combined with an endless accumulation of new tariffs that are fundamentally unacceptable.
MARX: On the same stage, on the same day, Canadian Prime Minister Mark Carney offered a similar message.
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MARK CARNEY: The powerful have their power. We have something, too - the capacity to stop pretending, to name reality, to build our strength at home and to act together.
MARX: Carney called this approach Canada's path, and after welcoming others to join his nation on that path, he received a rare standing ovation.
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MARX: Speaking to European journalists, California Governor Gavin Newsom was less diplomatic in his advice for European leaders.
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GAVIN NEWSOM: It's time to stand tall and firm, have a backbone.
MARX: Newsom, who's become a frequent and very public critic of the president over the past year, said it should now be clear that a new approach to Trump is needed.
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NEWSOM: This guy's a wrecking ball. I hope people are waking up to what we're dealing with. This is - it's code red. I mean, you guys are still playing by all set of rules, everybody, the globe is with this guy. He's unmoored. It's the law of the jungles, the rule of Don.
MARX: A local Davos church that for years hosted corporate interviews on the business TV channel CNBC is instead this year branded as USA House, with stylized, almost cartoonish images of American eagles and the U.S. Capitol.
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SCOTT BESSENT: It's an honor to represent the U.S. delegation on behalf of President Trump. It's been a...
MARX: Standing outside that church atop melting snow at the start of the week, Treasury Secretary Scott Bessent told the assembled media that America First did not mean America alone. But here in this famously neutral nation, some historic U.S. allies seem now to question the point of continued cooperation. For NPR News, I'm Willem Marx in Davos, Switzerland.
DETROW: Just before the president left for Davos, he spoke to reporters at the White House for more than 90 minutes, and he took credit for remaking and, as he put it, fixing America.
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PRESIDENT DONALD TRUMP: We have taken a mess and made it really good. It's going to get even better.
DETROW: Meanwhile, Trump's aggressive push to acquire Greenland and the threat of even more tariffs has shaken the stock market, and voters say they are worried about prices in their own personal economy. Joining me now to make sense of all this is senior national political correspondent Mara Liasson, as well as NPR's chief economics correspondent Scott Horsley. Hi to both of you.
MARA LIASSON, BYLINE: Hi there.
SCOTT HORSLEY, BYLINE: Hi.
DETROW: Scott, I want to start with you. This is not the first time Trump has imposed tariffs to try and force countries into complying with his plans. Have those tariffs actually achieved what he's promised?
HORSLEY: So far, the president's tariffs have produced neither the boom that Trump and his allies boast about nor the economic disaster that a lot of forecasters had feared. The federal government is collecting about four times as much tariff revenue as it did before Trump returned to the White House. Most of that bill's being paid by Americans, by the way, not people in other countries. But so far, we haven't seen really widespread retaliation from most of our trading partners. Now, that could change with these new tariffs Trump's threatening against NATO allies over Greenland. Some European countries are saying it's time to hit back with tariffs of their own on U.S. exports. And the threat of a renewed trade war really rekindled old fears in the stock market today. The Dow tumbled almost 900 points.
DETROW: Now Mara, like Scott said, this is all part of a yearlong playbook for Trump. How does this fit in?
LIASSON: It fits in perfectly with Trump's concept of the presidency, where executive power is almost completely unchecked. And he likes to do things where the president has a lot of power without Congress, without any checks and balances, like tariffs, like pardons, like sending the National Guard to cities, like executive orders and, of course, foreign policy too. He considers tariffs, which he can do almost unchecked, as a kind of Swiss Army knife. He can use it for almost anything, from the economy to foreign policy, as you see him doing now over Greenland.
Now, the Supreme Court is about to tell us if there are any limits on his power to tariff. But meanwhile, he's taking attention away from all of the things he said he would do to fix the economy. And instead, he's been kind of fixated on taking over Greenland, a move that would effectively mean the end of NATO, which he acknowledges. And what struck me about this press conference was how restrained he was when he talked about Greenland. He was asked how far he would go to take over Greenland. He said, you'll find out. He didn't repeat his threats to use military force. He said that he'll come to an agreement through talks with NATO, something that NATO will like. Now, that doesn't mean he's not going to change his tune tomorrow, but he was restrained today.
DETROW: Right. And Scott, I want to talk about something that Trump and the rest of the administration have focused a lot on on this one-year anniversary, how good and healthy the economy is, how it is the envy of the world. How true is that?
HORSLEY: Yeah. Well, if happy talk were all it took, we would be in great shape. Here's the Treasury Secretary Scott Bessent once again, speaking to CNBC in Davos.
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BESSENT: This is the one-year anniversary of the president taking office. We have the strongest economy in the world. We have the strongest military in the world, and the U.S. is back, and this is what U.S. leadership looks like.
HORSLEY: Polls show a lot of Americans are not buying that, even though, by a lot of measures, the economy is in OK shape today, just as it was before Trump returned to the White House. GDP is growing at a good clip. Workers' productivity is up. There are some economic challenges, though. Manufacturing is in the tank. We lost 75,000 factory jobs last year. The overall job market has slowed down a lot. Of course, immigration is also way down. So while we're not adding a lot of jobs, we're also not adding very many workers.
At the same time, inflation is still elevated, and that's partly because of the president's tariffs. Now, there's been an argument from the White House that once those tariffs are in place, they won't continue to put upward pressure on prices. It'll be a kind of a one-and-done price increase. That would be true if the tariffs themselves are one-and-done, but if the president keeps adding new tariffs, then the inflationary pressures will also continue.
DETROW: Mara, inflation and the high cost of living were a really big political liability for former President Biden, and I think President Trump is one of the first people who saw that. He really zeroed in on that to great effect. But is it fair to say now they seem to be a drag on President Trump as well?
LIASSON: That's true. And what else struck me about this press conference was how similar Trump and Biden were. Both of them tried to convince Americans that the economy was a lot better than voters' own experience of the economy is. You know, there's a phrase, you can't eat GDP or the stock market. And people don't care about the stock market. They don't care about the rate of inflation. They care about prices. And they don't like it when politicians tell them that they should not believe - that they should believe their own lying eyes, and the economy is a lot better than they think it is.
HORSLEY: And Americans who are unhappy about the price of beef don't think taking over Greenland is going to be the answer to that.
DETROW: And the latest promise we've heard from Trump is that he's saying that he would like to return some of that tariff revenue to U.S. consumers. Here's a little bit of that.
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TRUMP: The reason we're even talking about it is that we have so much money coming in from tariffs that we'll be able to issue at least a $2,000 dividend and also pay down debt for the country.
DETROW: Scott, is that possible?
HORSLEY: No. The president's math just doesn't add up there. Paying a $2,000 dividend would cost more than Trump's tariffs are expected to generate this year, so it would add to the deficit, not reduce the debt. And keep in mind, the White House has already earmarked some of that tariff revenue to bail out farmers who saw their export markets dry up because of the president's trade wars.
LIASSON: But you can see how much Trump believes in running the economy hot, whether it's tax cuts or dividends or bailouts for farmers or lower interest rates. He wants to juice the economy, and he wants credit for it.
DETROW: I mean, is it fair to call this kind of a split screen? You've got Trump headed to Davos for this big confrontation with European leaders. And then here at home, Republicans are trying to steer the conversation to affordability and immigration? Like, what is the strategy here?
LIASSON: Well, Trump isn't following the strategy as far as affordability is concerned. All anyone is talking about in Europe and in Davos - this big business meeting - is Greenland, and he's supposed to be going over there to talk about housing. His advisers have promised a pivot to affordability with a lot of new ideas to bring prices down. He didn't speak about any of them today, and he even dismissed, again, the idea that affordability is a real problem.
HORSLEY: And to be fair, it was always going to be a little weird backdrop for the president to talk about housing affordability in Davos, Switzerland, surrounded by multimillion dollar ski chalets.
DETROW: Good point.
HORSLEY: The U.S. housing market has been in a slump for several years now. A lot of would-be buyers are priced out. We were beginning to see a little bit of progress there. Mortgage rates have come down from about 7% a year ago to just over 6% last week. But this renewed trade war could jeopardize that. We saw Treasury yields jump today, and what's more, the President's effort to manhandle the Federal Reserve could also backfire. Trump wants lower interest rates, but if people come to see the Fed as less able to control inflation, we could end up with both higher prices and higher interest rates.
DETROW: That is NPR's Scott Horsley and Mara Liasson. Thanks to both of you.
LIASSON: Thank you.
HORSLEY: Good to be with you.
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