Trump's arrival brightens US outlook, darkens everyone else's

Usually, what's good for the U.S. economy is good for the world. Not this year.

- GregIp

When participants at the World Economic Forum look at President Trump's plans, they become more optimistic about the U.S. and more pessimistic about the rest of the world, especially Europe.

The U.S. was outperforming much of the world before Trump was elected. His agenda could extend that outperformance by making the U.S. the preferred destination for foreign investment via lower taxes and regulation and even cheaper energy, while his promised tariffs hurt others' exports.

The zeitgeist is embodied by the investment bankers flooding Davos who, in their own version of speed dating, rush from one client meeting to another, late into the night over expensive wine and artisanal cocktails.

Bankers are betting the Trump administration heralds a new wave of megamergers that wasn't feasible under former President Joe Biden's harsh scrutiny around antitrust. But a European banker said the tone outside the U.S. is "really depressing," particularly in Europe, where deal activity is subdued.

Indeed, some predict that U.S. companies, sporting far higher stock valuations, will soon be snapping up European rivals.

The tariff effect

Traditionally, a strong U.S. economy lifted all boats by helping other countries' exports. But Trump has seen that dynamic as other countries are taking advantage of the U.S., and now seeks to turn the tables.

The "driving philosophy and mindset of the incoming administration" is a "zero-sum game strategy," said Tim Adams, president of the Institute of International Finance.

People at Davos who broke away from meetings and parties to follow the new president's flurry of executive orders were relieved that, for now, tariffs weren't included.

Still, the prospect of tariffs hangs over U.S. trading partners, especially Mexico, China and Canada, all singled out by Trump.