Section 301 Retaliation Is Cost of Confronting China, Commerce Secretary Says
Commerce Secretary Wilbur Ross said retaliation from China is inevitable if tariffs are imposed because of intellectual property violations, but he said that's not a reason not to act. "If you never take any action because you're afraid of retaliation, you end up back where you started," he said. China would also likely suffer more than the U.S. by its retaliatory tariffs, because it would cause food inflation where people have lower incomes and therefore spend more of their income on food, Ross said while speaking to an audience of business journalists on April 27.
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China would run out of U.S. imports to target, Ross said. While he knows China and Europe will retaliate if they face tariffs, "in terms of it getting to Armageddon-type proportions, I don't see that happening." He said the agriculture secretary is going to help ginseng farmers -- and said "our sympathies go out to them." The proposed list of U.S. tariffs includes some pharmaceuticals and medical devices (see 1804250035).
Ross also talked about the May 1 trip to China of U.S. Trade Representative Robert Lighthizer, China hawk Peter Navarro, Treasury Secretary Steven Mnuchin and White House Chief Economic Adviser Larry Kudlow. Ross said it's difficult to know what path the trade conflict between China and the U.S. will take. He said President Donald Trump has made it clear he is looking for a $100 million reduction in the trade deficit with China. "Exactly how you get there is a different question," he said. "How long it takes to get there is a different question."
He batted away criticism that the U.S. has not made its goals clear to China. "Over the years, there hasn't been a lack of lists submitted to them, that's not the problem," he said. "The problem is the execution." Ross said the U.S. is the closest to the free trade ideal that economists rhapsodize about, but added: "There is no free trade in the world. There is nobody who is really a free trader. Some of these other countries have done a better job of talking free trade and pretending to be free trade than we have, but simultaneously they have been practicing extremely protectionist behavior."