DAVOS, Switzerland – Bosses of international companies fear a rise in protectionism in the wake of Donald Trump’s election win, according to figures out Monday at the World Economic Forum.
The PwC Global CEO Report 2017 shows that 59 percent of business leaders around the world are “somewhat†or “extremely†concerned about protectionism. That number rises to 64 percent in the U.S. and Mexico.
The survey of almost 1,400 chief executives was carried out between September and December 2016. But in an interview published Monday, Trump said the U.S. would impose a border tax of 35 percent on cars that Germany’s BMW plans to build at a new plant in Mexico and export to the U.S. market.
German industry association BDI warned that protectionism would not help strengthen American industry. “Trade wars only create losers,†BDI president Dieter Kempf said.
Protectionist views are gaining traction in Europe. Philip Hammond, the U.K.’s chancellor, threatened a higher tariff barrier after Brexit, also using the example of Germany’s car industry. “We aim for a new arrangement on a reciprocal basis,†he said of the future economic relationship between Britain and the EU, adding that “Mercedes-Benz, and BMW and Volkswagen, would also like to sell their cars in the U.K. market without paying tariffs.â€
The report found that 58 percent of CEOs think it’s become increasingly difficult to “balance globalization†— meaning that free trade and free movement of capital, services, and people might have contributed to political discontent.
Forty-four percent said globalization had “not at all†helped close the gap between rich and poor — a stark contrast to the first such survey, in 1998, when business leaders were positive about the effects of globalization.
PwC’s chairman Bob Moritz said “understanding the root cause of the potential discontent or perception is a critical first step towards communicating the benefits of business for society.â€
CEOs were, however, in a positive mood when it came to the outlook for their own business: 38 percent were very confident about their company’s growth in the coming 12 months (up 3 percentage points on 2016); and 29 percent (up 2 percentage points) believe global economic growth will increase this year.
