The United States is willing to take a little pain in a trade war with China if that is what it takes to get China to change, Commerce Secretary Wilbur Ross has said ahead of his two-day visit to China today.
"If you don't take some risks and you don't show you are willing to absorb a little bit of pain, how on earth are you going to get things changed?" he said at the Milken Institute Global Conference in Los Angeles on Tuesday.
"If you just do nothing, we know how that turns out… more and more trade deficit, that's not acceptable to this administration."
Mr Ross also downplayed speculation over the US contemplating returning to the Trans-Pacific Partnership (TPP) - the 12-nation trade pact that President Donald Trump withdrew the country from after taking office.
The US had a lot to deal with, Mr Ross said, and there was not enough bandwidth to start talks on a return to the TPP. There was also no appetite in Congress for it.
Since Mr Trump took office, the US has set tariffs on imports of solar panels, washing machines, aluminium and steel, is renegotiating the North American Free Trade Agreement, and has put China on notice to allow more access to American goods and services and open up markets to American firms - the goal of Mr Ross' trip to Beijing.
NO PAIN, NO GAIN
If you don't take some risks and you don't show you are willing to absorb a little bit of pain, how on earth are you going to get things changed? If you just do nothing, we know how that turns out… more and more trade deficit, that's not acceptable to this administration.
COMMERCE SECRETARY WILBUR ROSS, on the bruising the US could suffer over its trade war with China.
Mr Trump wants a US$100 billion (S$130 billion) reduction in America's US$375 billion trade deficit with China. Specific requests include a cut in China's tariffs on American cars, and freeing US firms in China from joint venture and tech transfer rules.
In return, China, which imports commodities like sorghum and soya bean from the US, could retaliate against American farmers, hitting Mr Trump's political base.
Asked about the risk to US farmers, Mr Ross said: "It's a question of choosing your risks. Our trade imbalance has gotten worse so far this year... our imports went up. We are trying to reverse that trend."
Separately speaking on CNBC, on the sidelines of the conference, Mr Ross said he had "some hope" that agreements could be reached to resolve trade tensions with China.
But, citing the US' Section 232 and Section 301 trade investigations, he said Washington was ready to impose tariffs to punish Beijing over its intellectual property practices. (Section 301 deals with intellectual property; Section 232 addresses national security.)
The Trump administration says America's domestic steel and aluminium industry has been eroded by cheap imports mostly from China, and it is not good for the US to be dependent on imported steel, as a matter of national security.
"If we don't make a negotiated settlement, we will pursue the 232 and impose them, we will pursue the 301 and impose them," Mr Ross said. "One way or another, we are going to deal with this recurring problem of trade with China."
The US delegation to China includes Treasury Secretary Steven Mnuchin, US Trade Representative Robert Lighthizer, White House economic adviser Larry Kudlow, and the famously anti-China trade hawk Peter Navarro.