Ross says US must create ‘more painful’ environment in trade – CNBC

‘High trade barriers need to achieve Trump’s goal’

WASHINGTON, June 21, (Agencies): Commerce Secretary Wilbur Ross said on Thursday the United States needs to make it harder for its trading partners to have high trade barriers in order to achieve President Donald Trump’s ultimate goal of lower barriers and a level playing field.

“What we have to do is create an environment where it’s more painful for these parties that have these huge trade barriers, both tariff and non-tariff, got to make it more painful for them to keep those barriers than to get rid of them,” he told CNBC.

“In the particular case of China, it’s compounded by their disrespect of intellectual property, the forced technology transfers, the cybersecurity breaches.”

Trump this week expanded the amount of Chinese imports possibly facing new duties. He threatened on Monday to hit $200 billion of Chinese imports with 10 percent tariffs if Beijing retaliated against his previous target of $50 billion in imports, aimed at pressuring China to stop stealing US intellectual property.

The growing trade conflict hit financial markets hard, with Beijing accusing the United States of “extreme pressure and blackmailing” and vowing to retaliate. With both sides upping the ante, the risks of a damaging trade war grew dramatically.

In the CNBC interview, Ross downplayed the impact of tariffs on steel and aluminum imports from Canada, Mexico and the European Union that Washington imposed last month, saying they would not have a huge impact on product prices and the overall economy.

Those tariffs, Ross said, had induced other countries to take similar action against dumping.

“After we put those in, suddenly Europe started a whole bunch of safeguard actions to protect their own borders against dumping of steel and aluminum,” Ross said. “Before we put our tariffs, they hadn’t done that. Similarly Japan.”

“It may sound strange but the fact that we put tariffs on the goods coming out of them has modified their behavior and has induced a pretty high degree of international cooperation against dumping,” he said.

Meanwhile, much of the rye whiskey aging in hundreds of barrels at Catoctin Creek Distillery in Virginia could end up being consumed in Europe, a market the 9-year-old distilling company has cultivated at considerable cost.

But an escalating trade dispute has the distillery’s co-founder and general manager, Scott Harris, worried those European sales could evaporate as tariffs drive up the price of his whiskey in markets where consumers have plenty of spirits to choose from.

“If Europe dried up, then we’re sitting on inventory we didn’t need,” Harris said by phone. “And that’s a really tough position to be in.”

What American whiskey makers have dreaded is becoming reality. The European Union will start taxing a range of US imports on Friday, including Harley-Davidson bikes, cranberries, peanut butter, playing cards and whiskey. The union is responding to President Donald Trump’s decision to slap tariffs on European steel and aluminum.

American distilleries large and small have watched warily as the threat of tariffs from Europe ratcheted up in recent weeks. And while larger, corporate-owned facilities tend to do the most business overseas, small and midsized companies could be especially vulnerable, since they lack the ability to stockpile reserves and take other protective steps.

Foreign markets have become lucrative for American whiskey makers. Export revenues for bourbon, Tennessee whiskey and rye whiskey products topped $1 billion in 2017, continuing a strong trend in recent years, according to the Distilled Spirits Council.

Four of the five top growth markets by dollar value for American distilled spirits were in Europe — the United Kingdom, Germany, France and Spain. Total US spirits exported to the EU in 2017 were valued at $789 million, the distilled spirits trade group said.

American whiskey has also been targeted by other countries targeted by the Trump administration, including China, Canada and Mexico.