Washington: Giving tax concessions to countries like Germany and China does not make sense anymore, United States commerce secretary Wilbur Ross said on Monday, noting that America has unilaterally given away all kinds of concessions ever since the end of World War II. "Think about it, we have unilaterally given away all kinds of concessions ever since the end of World War II. And, in the beginning that was probably good policy to rebuild Europe and rebuild Asia after the ravages of the war," Ross told ABC News. "The mistake that our trade negotiators made way back then and continued to make was not time limiting it. Concessions that were perfectly reasonable to make to Germany in 1945 or China in 1945 don't make sense anymore. Those are
now very mature, big, strong economies," Ross said. "So, there's a lot of history that needs to be undone," he said, ahead of President Donald Trump signing an executive order that will impose a flat 25 percent import tax on steel and 10 percent on aluminium. Trump is expected to sign it next week.
There has been a sharp reaction from countries, with the European Union and China indicting retaliatory measures. Trump in a series of tweets early this week said that it will not work and the US would impose additional tariffs on other items. "If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a tax on their cars, which freely pour into the US. They make it impossible for our cars and more to sell there. Big trade imbalance," Trump said. In another tweet, Trump said that trade wars are good and easy to win.
"I think what the president had in mind was that unlike the Smoot-Hawley days in the 1930s, back then US had a big trade surplus and the world was in a depression. Now, we have a big trade deficit. Well, if we have big trade deficit with our other partners, they have a lot more to lose than we do, because those hundreds of billions of dollars are in their pockets now, not ours," Ross explained.
He refuted reports that increase in import tariff on steel would hurt American industries, in particular the car manufacturing industry. "Similarly, all the other products, the total amount of tariffs we're putting on is about USD 9 billion in a year. That's a fraction of one percent of the American economy," he said. "So, the notion that it would destroy a lot of jobs, raise prices, disrupt things is wrong. As to the idea of retaliation, they may well be some sort of retaliation. But, the amounts that they're talking about are also pretty trivial. It's some USD 3 billion-odd of goods that the Europeans have threatened to put something on," Ross said. "Well in our size economy, that's a tiny, tiny fraction of one percent. So, while it might effect an individual producer for a little while, overall it's not going to be much more than a rounding error," the commerce secretary said.
The Trump administration has argued that it is imposing such a tariff under national security interests. Ross reiterated that there would be no exceptions to the rule. "As of the moment, as far as I know, he's talking about a fairly broad brush," he said.
Updated Date: Mar 05, 2018 08:30 AM