A televised image of Donald Trump rose above delegates in the conference room at the Davos ski resort on Thursday, embodying the enormous impact the new president is having just days into his second term in the Oval Office.

Prime Ministers, business leaders and the head of the European Central Bank lined up to see him address the World Economic Forum, his first speech to a global audience since returning to the White House. One attendee joked about bringing some popcorn for the show.

Trump did not back down, eliciting nervous laughter as he issued a series of demands and ultimatums to allies and rivals alike.

Saudi Arabia and other producers must lower oil prices, global central banks must “immediately” cut interest rates, and foreign companies must increase their investments in American factories or face tariffs. The European Union – which has been particularly disdained – should stop imposing competition fines on major US technology companies.

“We will ask for respect from other countries,” the president said. His predecessor “allowed other countries to benefit from the United States.” “We cannot allow this to happen any longer.”

Trump’s demands came amid a frenetic first week in office in which the president launched a blitz of executive orders and announcements aimed not only at reshaping the country but also asserting America’s economic and trade supremacy. Tariffs of up to 25% could be imposed on Canada and Mexico as early as February 1, which would ignore the trade agreement that Trump himself negotiated in his first term.

China could face tariffs of up to 100% if Beijing fails to agree a deal to sell at least 50% of TikTok to a US company, while the European Union is required to buy more US oil if it wants to avoid tariffs. . In confirmation of the new American unilateralism, Trump withdrew the United States from the World Health Organization, as well as exiting the Paris Climate Agreement for the second time.

Remarkably, Trump reached for an obscure 90-year-old provision in the US tax code that threatens to impose a levy on taxes. – Doubling tax rates on foreigners And companies if their home countries consider that they have imposed “discriminatory” taxes on US multinational companies.

This proposal throws a “hand grenade” into international tax policy-making, says Nils Johansson, director of the Oxford University Center for Business Taxation at Saïd Business School. He adds that this move indicates a determination to “shape the tax policy of other countries through coercion, not through cooperation.”

The plans unveiled by the new president this week raise the specter of a multi-front economic war as Trump uses the strength of the reviving US economy to rebalance the international system in his favor.

The key question, investors and policymakers say, is whether this amounts to a more intense version of the transactional, deal-making approach we saw in Trump’s first term, or a shift toward unbridled unilateralism, as a White House unfettered by the constraints of international law cajoles intimidating foreign governments and companies. .

“He weaponizes everything: trade, taxes, energy. And I worry that finance will be weaponized, too,” says the head of one of the world’s largest sovereign wealth funds. “Most people are betting that he cares about the stock market – and that is the only choice.” . “That and the fact that he said he wanted to be a peacemaker.”

In Davos, top US executives They were keen to welcome Trump’s agenda – suggesting that there was little concern within the corporate sector about the possibility of the US tearing up the rules-based global order.

Tariffs are an “economic tool.” “That’s it,” said Jamie Dimon, CEO of JPMorgan Chase, in an interview with CNBC in Davos this week. “If it’s a bit inflationary, but good for national security, so be it. Get over it.”

The US stock market rose this week as investors digested the possibility of easing regulations governing banks and high-tech companies, as well as announcing huge plans. A $100 billion artificial intelligence infrastructure project Launched by OpenAI and SoftBank. By the end of the week (as of late Friday afternoon in New York), the S&P 500 was up 1.8 percent.

“Anecdotally, people talk to CEOs and they say they are all feeling super positive,” says Mahmud Pradhan, head of global macroeconomics at the Amundi Investment Institute.

“If I ask myself what justifies animal instincts, banking deregulation is real, and the prospect of lower corporate taxes is real.”

However, outside the US, the threat of a widening set of trade barriers and conflicts over tax policies are weighing on the economic outlook. Valdis Dombrovskis, the European Union’s economic commissioner, says the disintegration of global trade will be of particular concern to economies like Europe, where trade accounts for more than a fifth of gross domestic product.

He cites International Monetary Fund estimates that show such extreme geoeconomic fragmentationtion Trade could erase 7 percent of global GDP in the medium term. “If this global economic fragmentation stabilizes — and there is a risk that it will — it will have significant negative economic consequences.”

Even as they brace for the onslaught of tariffs, some European policymakers claim to see potential positives.

“It’s a new environment that is certainly less comfortable for Europe, but it also offers a lot of opportunities,” says Alexander De Croo, Belgium’s prime minister. “Europe can show there that we are stable and that we are in a predictable environment where investment is possible.”

European officials also say they could benefit from deeper trade ties with other countries that might otherwise be squeezed out of U.S. markets. “Countries come to us because they want to diversify away from the United States,” says a senior EU official.

“We need to continue to open up, but without being naive,” says Spanish Economy Minister Carlos Cuerbo. “We need our companies to compete on equal terms, on equal terms, and with equal opportunities in relation to others. This was the case with China. This must also be the case with the United States.”

While the United States and Europe have long objected to Chinese trade practices, Beijing this week was quick to present itself as a supporter of the rules-based global order rather than its opponent.

Speaking the day after Trump’s inauguration, Chinese Vice Premier Deng Xuexiang insisted that economic globalization “is not a zero-sum game; you lose and I win.” He said that the world’s largest countries need to “lead by example,” praising international bodies including the World Trade Organization and the United Nations.

The irony of China presenting itself as a model of free trade while Trump seeks to extract concessions from his closest allies using brute economic force was not lost on the Davos attendees watching Deng’s performance.

Despite the barrage of measures With the statements made by the White House this week, most global policymakers are taking a wait-and-see approach to Trump’s aggressive deals, rather than jumping to conclusions about the long-term ramifications on the global economy. Global economic system.

“Why would I put my cards on the table before he did?” says a senior EU official.

Jonathan Reynolds, Britain’s business secretary, admits there are still “a lot of questions” about the president’s approach. “Is it about leverage in negotiations? Is it about increasing revenue in terms of tariffs?” He says the UK will continue to call for a “more open global trading economy”.

However, there is no doubt that Trump is signaling a significant escalation in how trade is weaponized compared to his first term.

“Those around Trump have had time to build a methodical, methodical approach to protectionist trade policy, and it shows,” says Allie Rennison, a former official at Britain’s Department of Commerce, who now works at the SEC Newgate consultancy. She says the approach would be to build a case file of “evidence” against countries, then use it to extract concessions in the areas of economic and foreign policy.

The question remains: how far is Trump willing to go? The danger of trampling on the rules-based order is a complete collapse in diplomatic and legal channels for settling international disputes, says Jeromain Zettelmeier, head of the Bruegel Research Center.

He warns that if Trump withdraws from a broader range of international frameworks, such as the World Trade Organization or the International Monetary Fund, the arrangements that help govern the global economy could be “significantly destroyed.”

The extreme case, he adds, is that they “really look like Putin” – that is, by violating the sanctity of international borders. Taking control of Greenland or the Panama Canal by force, as Trump has threatened, would be tantamount to “reintroducing the law of the jungle.”

Michael Strain, director of economic policy studies at the American Enterprise Institute think tank, questions whether Trump will reverse the “fundamental forces” driving global economic integration — and whether the president even wants to do that. But regardless, he says, the uncertainty about his true intentions “makes it difficult for companies to plan, creates a chilling effect on investment, and creates tensions with our allies.”

Some warn against being intimidated by Trump’s threats or his embrace of limitless capitalism, because his agenda has been largely incoherent.

“What we see are massive doses of American arrogance,” says Arancha Gonzalez, dean of the Paris School of International Affairs at Sciences Po. “We were blinded by the intensity of all the issues on the table and the conviction of Trump. But we do not look at the contradictions. It’s as if we’re all on an orange drug.

Additional reporting by Harriet Agnew in Davos and Peter Foster in London

Data visualization by Keith Fry