US Commerce Secretary Wilbur Ross talks a hard line on trade ahead of China visit

Wilbur Ross speaking at the Milken Institute 21st Global Conference in Beverly Hills, California.
Wilbur Ross speaking at the Milken Institute 21st Global Conference in Beverly Hills, California.PHOTO: REUTERS

LOS ANGELES - 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, United States Commerce Secretary Wilbur Ross said on Tuesday (May 1).

“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,”  Mr Ross said at the Milken Global conference on the eve of a visit to China on Thursday.

“If you just do nothing we know how that turns out… more and more trade deficit, that's not acceptable to this administration,” he added.

Mr Ross also downplayed speculation on the US contemplating returning to the Trans-Pacific Partnership (TPP) – the 12-nation trade pact that President Donald Trump withdrew the US from soon after taking office.

Subsequently the TPP became the CPTPP, with 11 nations minus the US.

The US had a lot to deal with, Mr Ross said, and there was not enough bandwidth to start negotiating a return to the trade pact. There was also no appetite in Congress for it, he said.

Since Mr Trump has taken office, the US has put tariffs on solar panels, washing machines, aluminium and steel; is renegotiating the North American Free Trade Agreement (Nafta), and has put China on notice to allow more access to American goods and services and open up markets to American companies – which is the goal of Mr Ross’s two-day trip to Beijing.

President Trump has called for a US$100 billion (S$130 billion) reduction in America’s US$375 billion trade deficit with China. Specific asks include a reduction in China’s tariffs on American autos, and freeing American companies in China from onerous joint venture and tech transfer rules.

China in turn could retaliate against American farmers, hitting Mr Trump’s political base. China imports commodities like sorghum and soy bean from the US. Asked about the risk to American 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 he had “some hope” agreements could be reached to resolve trade tensions with China.

But, citing the United States' 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 national security to be dependent on imported steel.

“If we don’t make a negotiated settlement, we will pursue the 232s and impose them, we will pursue the 301 and impose them,” he said. "The purpose of the 232 is to deal with the problem of steel and aluminium, of overcapacity and overproduction on a global basis."

“One way or another, we are going to deal with this recurring problem of trade with China,” Mr Ross told CNBC.

The American delegation to China for two days of talks starting on Thursday, includes Treasury Secretary Steven Mnuchin, US Trade Representative Robert Lighthizer, White House economic adviser Larry Kudlow, and the famously anti-China trade hawk, Dr Peter Navarro.