Global financing: Do you see a great difference in how the Trump administration is treated, compared to its first period, when you are the Minister of Commerce?
Wilber Ross: The biggest difference is that we were drawing unknown water in the first chapter. It really does not really know whether (President Trump) has the legal authority to put a steel tariff, aluminum tariffs, fridge tariffs, or washing machine tariff. Therefore, we have dried the old legislation, some of 1976 and some of 1972, which were tested in the court and supported them largely.
The first thing is that it took a lot of time in the first management to ensure that we have the ability to do some things he wants. Now that it was established and was happy with the results, the president uses definitions on a larger scale. It uses it as a revenue measure, a diplomatic scale, and for all other types of purposes, such as trying to control the smuggling of fentanel and control the border. This is the first difference.
The second difference is that he has more general support in general and with the Republican Party. The last time, it was more controversial at the opening of this time. I saw this in popular vote. But more importantly, the last time, he had a relatively slim control over the Republican Party. There were many free merchants who were still in the Senate among the Republicans. Most of them retire now. This is a big difference. I have seen his ability to control Congress in some of the concepts that he was able to impose during this time, and now with very thin voices. However, this time, the Republican Republican Party in Congress is a good uniform behind the Trump agenda. It was not the first time.
The last factor that differs is when it was in his first term, there was still a global conception that free trade was the great goal, and the business community remains from the point of view of more internationalization, and more globalization of supply chains. Now, especially because of Covid-19, there is a rethinking rethinking. At this stage, many business executives realize that every time they add another country to their supply chain, adding a point of weakness.
There was a start to shift from globalization to Emiratization, making factories closer to their consumed markets. This was independently coming from Trump.
GF: Do you feel that the administration has a comprehensive plan to implement the customs tariff, or is it more interacting with the situation? What did President Trump not get from the United States, Mexico and Cananga agreement (USMCA) that he wants now?
Ross: Oh, well, this is a very good question. To answer this, we need to look at two parts of USMCA. As you know, Mexico was a great beneficiary of our moves against Chinese exports to the United States. Since the peaso was struggling because Mexican wage rates did not increase, it is completely competitive with China when it was dealt with shorter shipping distances, low inventory costs under implementation, and reduce transportation expenses.
However, Mexico did not rise to the level of the free trade agreement we presented with them. The oil and gas sector did not achieve as it was supposed, and its courts did not make more fair – an important component of the deal. Third, with electric cars and digital manufacturing to Mexico, we need to adjust the rules of origin to some extent.
I want to add that I am not part of the administration (now), nor I am their spokesperson. These are my personal opinions.
Therefore, you will remember that under USMCA, 60 % – 70 % of content from countries with a wage rate exceeds $ 15 per hour. This rule was supposed to ensure the participation of the benefits of turning trade into Mexico between Mexico and the United States now after the types of products that move there have changed, we need to improve the rules of origin accordingly. Therefore, these amendments were required anyway when it came to Mexico.
The new is the case of fentanel. Trump was pressing Mexico on the security of Fntanil and borders for a long time. But if you remember, during his first administration, he got Mexico to deploy 20,000 soldiers on the border by threatening tariffs. So this strategy is not new – it is just implemented by this time.
In terms of Canada, things are somewhat different. So far, Canada did not need to push Canada on the security of fentanel and borders. Canadians made a big mistake in how Prime Minister Justin Trudeau responded. Trudeau’s initial reaction was, “Well, it’s not a big problem. It is just a few kilograms of fentanel.”
A kilogram of fentanel from Canada can kill many people. Second, we believe that with Mexico’s cracks on the carts, these operations may turn into Canada. For this reason we want Canada ready to address the problem.
I want to add, I am not part of the administration (now), nor I am a spokesman. These are my personal opinions.
Likewise, Trump was pressing Canada on dairy products and wooden wood since his first term. But for the first time, he decided to take a step forward on soft wood by opening the American Forest Reserve. We have a lot of milling capacity to build homes and other purposes, but the trunk supply (harvesting wood) was somewhat limited. Now, this restriction is raised. This structural change led him to conclude that Canada’s share of soft wood exports should be reduced. Therefore, the realistic situation changed, and its response developed accordingly.
GF: What are the lessons you learned from the method of negotiating President Trump when negotiating for the first time on USMCA? To remove some definitions, the end of the smuggling of fentanel, stopping in illegal immigration, and Canada are required to become 51street state. How much is this negotiation and how much is the hunting?
Ross: I met President Trump by representing his creditors in Trump Taj Mahal. I was in a very discount against it. Its style is very aggressive and very strong in negotiations. You see this comes in trade. It was not aggressive the last time, partly because he has done a lot of businesses, including some real estate development in foreign countries.
The last time, he was not an expert in the most sophisticated aspects of trade. He learned many of the interactions we had with other governments at the time and now.
His negotiation style is one of the pressure for severe things, and is very ready to take punitive measures if he does not get what he wants. I saw it with Ukraine.
With Panama, he was able to create an environment where the sudden Hutchison Whampoa, not only the main ports, but many other ports that were working with it. He had not thought about this level of details in Trump 1.0. Now he knows more about possible goals. And every time he succeeds, as is the case with the Panama channel, which, as you remember, did not get much of the press because it was accomplished without a lot of screaming and confusion. Hutchison made a very good commercial decision to sell these ports to a Blackrock union.
One way to respond to Trump’s new policies is the question, “Well, well, here is something he wants. Maybe I can turn this to my urgent commercial interest.” Given that Hutchison was good with the sale of the port, this is not a bad model for other companies.
GFIt seems that you are very optimistic in general regarding the path of the new management and its commercial policy.
Ross: Well, I, but with one great warning: should be associated with the age of tax policies and standard cancellation. Remember that if Congress does not act, the tax cuts that enact it in its first administration will disappear automatically, which will increase the increase in taxes on companies. In addition to the tariff policy, it will be a heavy burden. For this reason it is important to happen.
It is also important to reduce government cost. I am a great admirer of what Elon Musk and Trump, although I am sure they will go far in some cases because they move so quickly. In some cases, they will have to re -calibrate their path, but it is important that Trump’s comprehensive policies be developed. It would be much better for our economy if his entire package passes instead of just a trade package.
In the defense sector, one of his major objections to Europe, and to the extent of Canada, is that they did not pay their fair share of NATO. This is an unjustified burden on the United States.
This changes. In fact, some Europeans talk about 2 % of the GDP of defense that was the NATO goal.
You have to look at the entire software collection. Reducing the ability of bodily people to obtain great (governmental) benefits, in many cases they get more compensation than they were working. This will disappear and it will be something based on our economy because we need a higher degree of workforce. To grow more quickly, we need a high workforce rate from 63 %.
GFDo you have any other concerns?
Ross: Well, there is always a danger when you try to change a lot of things in many geographical areas at the same time. There is always a risk of excessive expansion and real errors. It needs to move quickly and on all fronts for a local political reason: it will be difficult to transfer anything that requires a procedure for Congress that is not completed by September, because by that time, everyone in Congress will focus on the middle of the period, and they will be less inclined to do anything controversial.
GFAre there any problems in which you operate a company with the current management?
Ross: There are areas where we disagree. For example, as you may be familiar with, I wrote an editorial Wall Street Magazine Support for Nippon Steel acquisition of US Steel, which is directly suffering from US government policy. So, while I am widely synchronized with what they do, there are some very specific parts as we differ naturally – a lot.
