LARRY KUDLOW: Trump’s Efforts to Rescue Europe Amid Economic Challenges

In a powerful address at Davos, President Trump declared, “the USA is the economic engine of the planet. And when America booms, the entire world booms.” This sentiment echoes the words of Ronald Reagan, emphasizing that economic security at home is the foundation of national security abroad. If Reagan was the greatest president of the 20th century, Trump is positioning himself as a formidable leader for the 21st century.

The audience at Davos should have been taking notes on how to revitalize their stagnant economies. Many European nations have struggled for years, making critical economic missteps such as imposing confiscatory taxes, creating regulatory strangleholds, and adopting misguided climate change policies. Even after four years of conflict in Ukraine, European countries continue to purchase oil and gas from Russia, their supposed adversary. Furthermore, extreme climate policies have stifled industrial growth, while the prevalent European economic strategy seems to involve attacking American companies, particularly in the tech sector, through unfair trade practices and digital sales taxes.

Trump has revitalized American capitalism through his supply-side prosperity program, which includes tax cuts, deregulation, and a “drill, baby, drill” approach to energy production. While he may ruffle some feathers—such as advocating for a 10 percent credit card interest rate or challenging defense contractors—his commitment to capitalism and the incentive model of economic growth is clear.

As my friend Art Laffer often states, “if it pays more after tax, you will get more work, investment, risk-taking, and deregulation.” Trump believes in rewarding success rather than punishing it. He understands that strong economic growth leads to job creation, new factories, and increased production, which ultimately cannot be inflationary.

In fact, increased production is expected to reduce inflation. Trump reiterated this point during his Davos speech, advocating for a departure from the outdated, no-growth austerity model currently in place at the Federal Reserve, calling for new leadership to implement change.

Recent economic data supports the notion of a Trump boom. For the first three quarters of his second presidency, GDP is on a run rate of 4.4 percent. With additional incentives, including energy production, growth could reach 5, 6, or even 7 percent this year.

Interestingly, discussions about inflation have been muted, yet it is indeed declining. The Fed’s key indicator, the core Personal Consumption Expenditures Price Index deflator, is currently at just two-tenths of a percent per month, translating to an annual rate of only 2.3 percent over the past three months.

Durable goods inflation is also at 2 percent, and the anticipated tariff inflation has not materialized, even with modest Trump-era tariffs that have significantly reduced the trade deficit, further contributing to economic growth.

If European leaders possessed any foresight, they would heed Trump’s economic strategies to foster prosperity for their citizens. The reality is that the president is attempting to guide them toward a more successful economic future.

In a powerful address at Davos, President Trump declared, “the USA is the economic engine of the planet. And when America booms, the entire world booms.” This sentiment echoes the words of Ronald Reagan, emphasizing that economic security at home is the foundation of national security abroad. If Reagan was the greatest president of the 20th century, Trump is positioning himself as a formidable leader for the 21st century.

The audience at Davos should have been taking notes on how to revitalize their stagnant economies. Many European nations have struggled for years, making critical economic missteps such as imposing confiscatory taxes, creating regulatory strangleholds, and adopting misguided climate change policies. Even after four years of conflict in Ukraine, European countries continue to purchase oil and gas from Russia, their supposed adversary. Furthermore, extreme climate policies have stifled industrial growth, while the prevalent European economic strategy seems to involve attacking American companies, particularly in the tech sector, through unfair trade practices and digital sales taxes.

Trump has revitalized American capitalism through his supply-side prosperity program, which includes tax cuts, deregulation, and a “drill, baby, drill” approach to energy production. While he may ruffle some feathers—such as advocating for a 10 percent credit card interest rate or challenging defense contractors—his commitment to capitalism and the incentive model of economic growth is clear.

As my friend Art Laffer often states, “if it pays more after tax, you will get more work, investment, risk-taking, and deregulation.” Trump believes in rewarding success rather than punishing it. He understands that strong economic growth leads to job creation, new factories, and increased production, which ultimately cannot be inflationary.

In fact, increased production is expected to reduce inflation. Trump reiterated this point during his Davos speech, advocating for a departure from the outdated, no-growth austerity model currently in place at the Federal Reserve, calling for new leadership to implement change.

Recent economic data supports the notion of a Trump boom. For the first three quarters of his second presidency, GDP is on a run rate of 4.4 percent. With additional incentives, including energy production, growth could reach 5, 6, or even 7 percent this year.

Interestingly, discussions about inflation have been muted, yet it is indeed declining. The Fed’s key indicator, the core Personal Consumption Expenditures Price Index deflator, is currently at just two-tenths of a percent per month, translating to an annual rate of only 2.3 percent over the past three months.

Durable goods inflation is also at 2 percent, and the anticipated tariff inflation has not materialized, even with modest Trump-era tariffs that have significantly reduced the trade deficit, further contributing to economic growth.

If European leaders possessed any foresight, they would heed Trump’s economic strategies to foster prosperity for their citizens. The reality is that the president is attempting to guide them toward a more successful economic future.