Former Commerce Secretary Wilbur Ross joined "Forbes Newsroom" to discuss his experience dealing with China during his time in the first Trump Administration.
Category
🗞
NewsTranscript
00:00I would love to pick your brain on the H20 chips because AI chipmaker NVIDIA said they will suffer a $5.5 billion blow after the Trump administration put new restrictions on selling H20 chips to China.
00:15And do you see President Trump's about face when it comes to new restrictions on the H20 chips, which were originally made to adhere with U.S. export restrictions as a response to China blocking rare earth shipments?
00:27Well, that's a whole complicated issue.
00:34I think the idea of China making a strenuous response should not surprise anyone.
00:44China is very dependent on exports.
00:48And the trade war, especially from their point of view, is quite complicated in that their economy is only two-thirds the size of ours.
01:03So that means a dollar of pain that we inflict on their exports has one and a half times the impact of a power of a pain that they inflict on us.
01:20Second, they export to us so much more than we do to them that pretty soon they run out of products to put tariffs on long before we would.
01:36So the strategies for a China are very complex.
01:43And I was pleased to see, and I think it was constructive, that the Chinese publicly indicated that they're open to negotiating the tariff situation.
01:58And they even appointed a special, very senior person to be their point person, and they asked President Trump to do the same thing.
02:11And the only quid pro quo they sought was to be treated with a little more respect and not have all the slamming that many of the cabinet officials have been doing of China.
02:28So I thought that was a good conciliatory move on their part, and one that hopefully will lead to negotiations.
02:39The other part of negotiations, though, is this.
02:44During Trump's first administration, we made a fairly extensive phase one deal with China, but they never lived up to it.
02:55So one of the key things that we ought to focus on this time is enforcement.
03:02If we do make a deal with China and they don't live up to it, what are we going to do to enforce it?
03:11How will we, in effect, punish them if they don't live up to the deal this time?
03:19And that's a complicated thing to do.
03:21But I think, given our history with them, it's a very important component.
03:29If you don't have an ability to enforce an agreement, what is it really worth?
03:35President Trump said that talks between the United States and China are underway.
03:41He expects more talks to come, and he does predict that we will find a deal with China.
03:46In President Trump's first term as Commerce Secretary, you traveled to Beijing for trade talks with China.
03:52If you could impart any advice to the Trump administration and Commerce Secretary Lutnik in particular when it comes to dealing with China, speaking with them and negotiating with them, what would that advice be?
04:04Well, the main thing would be to recognize that we will have to make some sort of concessions to them in order to get concessions from them.
04:19I don't mean just in terms of tariffs, because the Chinese also have put up a lot of non-tariff trade barriers, limitations on products that are not science-based at all, but are really just designed to prevent us from selling those products to them.
04:46You have to factor in the non-tariff trade barriers as well.
04:54We have very few non-tariff trade barriers, so there isn't much to worry about for the Chinese from us, but we have a lot to worry about from the Chinese side.
05:10You've seen President Trump do his deal-making.
05:12You've been in the room where it happens, so to speak.
05:15When you see President Trump now focusing on semiconductors, do you think he's using that as a chip, no pun intended, to get China to the negotiating table?
05:27Well, every trade discussion ends up being a negotiation.
05:33And that's not only appropriate, it's inevitable, because trade is one of the most complicated economic phenomena a country has to deal with, because there are so many different geographies.
05:52There are so many different products, every situation is a little bit different, everybody's coming at it from a little different angle.
06:02So, President Trump learned a lot about it during his first administration, because we had extensive negotiations, not just with China, but with lots of other folks as well.
06:19And he also, very importantly, has become acquainted with the Chinese leadership prior to the administration.
06:31He had never dealt with the Chinese governmental leadership, so he didn't really have a clear idea what it would be like to deal with them.
06:43Now he's dealt with them quite a bit, both in terms of trade and in terms of all sorts of other policies.
06:53So I think he's better positioned to understand how to get a deal done.