#CNBC: U.S. Commerce Secretary Wilbur Ross on CNBC's "Squawk Box" Today
July 2, 2018 (Investorideas.com Newswire) CNBC's "Squawk Box" - Following is the unofficial transcript of a CNBC interview with U.S. Commerce Secretary Wilbur Ross on CNBC's "Squawk Box" (M-F 6AM - 9AM) today, Monday, July 2nd. Following is a links to video of the full interview on CNBC.com: https://www.cnbc.com/video/2018/07/02/watch-cnbcs-full-interview-with-commerce-sec-wilbur-ross.html?play=1.
Joe Kernen: Let's Get To Our Next Guest. He Joins Us From London Where He Is Setting The Trade Agenda For The President's Trip To The U.k. In Mid-july. U.s. Commerce Secretary Wilbur Ross Joins Us This Morning. I Guess The First Question, Mr. Secretary, How Do You Expect The Reception To Be? Like So Many Things We Don't Know, We Only Hear What We're Told Here. I Mean, There Was A Big Brexit Win Over There And I Would Imagine The Perception That He's Not Going To Be Welcome In London Is - I'm Not Sure If That's The Case Or Not. Can You Tell Us Anything On That?
Wilbur Ross: Well, So Far London Has Been Very Welcoming To Me, So I Can Only Speak From That Limited Experience. We'll See How It Goes. It's Going To Be A Fairly Brief Trip To Here Because As You Know, There's A Nato Meeting. There's The Big Meeting In Helsinki. There's A Lot Of Stuff Going On, So I Think We'll Just Have To Play It By Ear.
Kernen: The - The President Tweeted Congratulations To The New President, I Guess He's President-elect Of Mexico Where - We Haven't Decided Whether To Call Him President Lopez Obrador Or Amlo. Whatever You Say I'll Take As What We Need To Do. But What's That Going To Be Like As Far - Can You Tell? It Was A Very Nice Tweet That The President Sent. What's This Guy All About? You Think - He Has Moderated Some Of His Leftist Views, But What Are We Going To Be Dealing With In Terms Of Nafta And Everything Else?
Ross: Well, Clearly The Reality Is That Mexico Needs Some Sort Of An Arrangement With The U.s. We're The Vast Bulk Of Their Exports And They Have A Huge Trade Surplus With Us, Some 70-odd Million Dollars. But Overall They Have A Trade Deficit. So They Need Very Much Their Involvement With The U.s. We Think He Understands That And It's Really A Question Of When Will The Talks Resume? Will He Use The Foreman Negotiators? Will He Pick His Own People? How Will The Agenda Work Out? Those Are A Little Bit Unknown As Of The Moment But As I Say, The Reality Is They Need An Arrangement With The U.s.
Kernen: We May Come Back To Nafta - We've Got So Many Things To Talk To You About Today. Everybody - You're Famous For The Holding Up The Can To Kind Of Show That It Was Not - The Effects Might Not Be As Big As What You Read About. But Then In The Media, Last Week Or Week Before, It Got A Lot Of Play, The 21,000 Companies Have Already Petitioned To Try To Get Waivers On - You Know, We Need To Train People Just To Consider The Waivers For Some Of These Tariffs. And That They're Talking About Layoffs, They're Talking About Bankruptcies, Closing Down. Is There - I Mean, What Should We - When We Read That, Should We Think It's More Than Just A Can Or More Than Just, You Know, Pennies That We're Talking About Here?
Ross: Well, Quite A Few Waiver Requests Have Come In. More Actually Than We Had Had Anticipated. But Part Of The Reason For That Is A Lot Of Businesses Are Kind Of Gaming The System. Anything That They Import Right Now In The Way Of Steel Or Aluminum, They Might As Well Put A Request In And Take A Chance That It'll Be Granted. So I Think There's A Lot Of Duplicative Activity. One Individual Company Put In Itself Over 1,100 Requests. Hard To Imagine That That Company Really Has More Than 1,100 Products That Are Simply Not Available In The U.s. Market. But We Are Dealing With Them. We Will Deal With The Requests Even More Rapidly Had Congress Appropriated The Money We Requested. They Did Not. They Gave Us A Small Fraction Of It And They Delayed Even That Quite A Bit. So That Has Resulted In A Bit Of A Backlog. But We Now Have Gotten To The Point Where We're Processing Things More Rapidly Than The Inflow Of New Exclusion Requests. So That Backlog Will Start Coming Down. Hopefully At A Pretty Rapid Clip.
Kernen: I Mean - Wilbur, At Some Point I Want To Talk About - The Journal's Got A Piece On They Think It's A Winning Issue For The President With Auto Tariffs For Europe. I Want To Talk About Upcoming China Tariffs That Are Going To Happen. And Then About Withdrawing From The Wto. That Was - I Know The President -
Ross: There's No Sound.
Kernen: Did You Lose Audio, Wilbur, Or Not? Can You Hear Us Now? I Don't Know Whether We Lost Audio Or Not.
Andrew Ross Sorkin: We Might Have Lost Him For A Second.
Kernen: It Wasn't The Question, Right?
Sorkin: No, No. It Wasn't The Question. We Do Need To Talk To Him About The Wto.
Melissa Lee: Yes.
Sorkin: I Do Want To Get A Better - One Of The Things I Want To Talk To Him About, And We Talked To Steven Mnuchin Last Week About This, Is - Was What Happened With China And This Whole Cfius Situation. There's Still Two Ways To Read The Cfius Situation In My Mind. One Is That Somehow There's A Backing Away From A Really Hard Line Stance. The Other Is That This Is A Hard Line Stance Without Saying It's A Hard Line Stance, Which Is To Say It Gives You All Sorts Of Flexibility To Be As Hard Line As You May Really Want To Be.
Lee: If You Tried Out Something That's Even Harder And Pull It Back A Little Bit, It Doesn't Make It Less -
Sorkin: - And There's A Separate Issue Which Is You're A Ceo In America Today, There's - Without The Bright Lines, To Some Degree Theres Even More Uncertainty. Meaning, Do You Go For It And Try To Do A Transaction? Do You Not Know What's Really Going To Happen On The Other Side? These Are Things I Want To Talk To Him About Given The Fact He's Lived Through Some Of This. I Don't Know If We Got Him Back Or Not.
Kernen: Well, This Is Where We Can Use Some Of Our Expertise. Because I'm Going To Use The Word Efforting. Have You Used Efforting?
Lee: On Tv?
Lee: Live On Tv? No.
Kernen: Because It's Not A Word. But You See These Reporters Using It - They Are Efforting - I Guess It Means We're Trying To Do Something.
Sorkin: Trying To Do Something.
Kernen: We Are Efforting To Get Back Into His Ear Which Involves Phoning And Redialing And Everything Else. So It's Not Happening Immediately. So This Gives Us An Opportunity - We're Going To Effort To Make Some Money And Go To A Commercial Break.
Lee: Yes. We're Goihg To Effort To Commercial Break, Right Now. We'll Try And Bring Back Commerce Secretary Wilbur Ross On The Other Side. Stay Tuned.
Kernen: Let's Get Back To U.s. Commerce Secretary Wilbur Ross I Said About Six Things. And God - I Said About 6 Things. I Think We Lost You, Wilbur. I Said We Want To Talk About The Journal Piece.
Ross: Yes, You Did. I Hope It Wasn't - I Hope It Wasn't An Editorial Comment.
Kernen: No. We Thought You Did That. It Was Like, "oh, Gee, I Can't Hear Anything! Did He Ask Me About The Wto Withdrawal?" No. Where Do You Want To Start? Does The President Think That Auto Tariffs Are A Good Way To Hammer His Point In The Eu? That's The Journal Piece. Talk About That To Start Andrew Wants To Ask You About The Cfius Stuff. I Thought That Was Interesting And I Wasn't Here Last Week For A Lot Of Your Analysis. But What About - Is That In The President's Mind, He Thinks He Wins A Trade War With The Auto Issue In Europe?
Ross: Well The Auto 232 Investigation Is Just Underway. We've Requested Public Commentary. We Got A Commentary From The European Commission Just This Morning. And We're Getting Lots Of Commentary From Other Participants. The Next Phase Will Be Toward The End Of July. We'll Be Having Two Days Of Public Hearings. And Then After We've Collected All Those Data, Then We Will Start Preparing The Report And Preparing Recommendations For The President. So It's Quite A Bit Premature To Decide How The Report Will Come To A Conclusion.
Kernen: And How About - I Mean, Someones Going To Ask You About The Wto Though. Do You Know What's Going On? Doesn't Congress Need To - Wouldn't They Need To Be Involved With That Is It Really Possible To Withdraw? Is The President Just Blowing Off Steam When He Gets - At Some Of These Jonathan Swann Cited Sources Saying He Really Wants To Do This And Mnuchin Pushed Back On That? Do You Know? Give Us The Inside Scoop On That, Wilbur.
Ross: Well, We've Made No Secret Of Our View That There Are Some Reforms Needed At The Wto. And In Fact, I Was On Panels Both In Davos At The World Economic Forum And At The Oecd In Paris A Few Weeks Ago. Wto Knows Some Reforms Are Needed. So I Think There Really Is A Need To Update And Synchronize Its Activities And We'll See Where That Leads. But I Think It's A Little Premature To Talk About Simply Withdrawing From It.
Sorkin: Mr. -
Lee: Mr. -
Sorkin: Oh, Go Ahead.
Lee: Mr. Ross, I Wanted To Ask A Broader Question As All Of These Go On - As We Levy Tariffs, There Are Retaliatory Tariffs, Et Cetera. I Know You And The Administration Have Made The Point The Economic Hit Based On Tariffs Alone Is Small To The U.s. Economy And Perhaps We're In A Position Of Strength To Deal With A Trade War Or Tariffs At This Point. But The Concern On Wall Street At Least For Stock Investors Is That It's Not Just The Direct Hit The Tariffs Will Put On The Economy. But It's Also This Period Of Uncertainty. And The Longer This Goes On, The More Uncertainty There Is. The Less Businesses Are Willing To Commit To Investing Capital. And That Even A Small Economic Hit Could Mean A Bigger Hit To The U.s. Stock Market. The Stock Market Has Always Been A Score Card For The Administration. How Much Pain Are You Willing To Endure On That Front?
Ross: Well, Capital Expenditures Actually Have Been Very, Very Strong And So Has Capital Repatriation From Abroad. In The First Three Months After The Tax Bill Alone, $300 Billion Was Brought Back From Overseas. Capex Is Very Strong. Employment Is Very Strong. Unemployment Is So Low That We Now Have More Jobs Available Than There Are Total Unemployed People The First Time In History. So We Don't See Any Signs Right Now Of Any Weakening In The Economy. We Think The June Quarter Will Be A Very, Very Strong Quarter. Well Above 3% And Maybe Even Pushing Closer To A 4% Annualized Number. So I Think All These Claims About The Sky Is Falling Are At Best Premature And Probably Quite Inaccurate.
Lee: To That Point Though, Mr. Ross, Yes The Data Has Held Up But The Stock Market Has Not. From The Highs In January, The S&p Is Down 5%. So As A Forward Looking Mechanism, The Stock Market Is Anticipating Trouble Ahead. Are You - Is The Administration Not Concerned About That At All? We've Seen An Increase In Volatility As Well In The Past Few Weeks.
Ross: Well - Well, The Stock Market Hates Uncertainty. In Fact, Business Hates Uncertainty. Everybody Hates Uncertainty. And The Worst Fear Is The Fear Of The Unknown. But Eventually The Arithmetic Prevails, Facts Prevail. And Fears Either Are Realized Or They Go Away.
Kernen: But What's The Number, Wilbur? That's The Question With Melissa That She's Asking. I Might Of - I'm Not Sure How Much Of It Is Directly Discounting Trade Wars, But There Must Be - I Mean, There - Is There A Notion That You've Got 40% To Work With On The Gains Or 35% Since The Election And You Won't Be - I Mean, If We Got To 20% Down From The Highs, Would You At That Point Think Maybe We're Inflicting Something - Would The Stock Market Become Something At That Point?
Ross: Well, First Of All, The Stock Market Is Still Well Up From Where It Was Before The President -
Kernen: I Know - Let's Say It Wasn't. Let's Say It Was Down 20%. Let's Say It Went 20% Off The Highs. If This Continues.
Ross: Yeah, There's No Bright Line Level Of The Stock Market That's Going To Change Policy. The President Is Trying To Fix Long-term Problems That Should Have Been Dealt With Long Time Ago, Weren't, And There Obviously Is Going To Be Some Pulling And Tugging As We Try To Deal With Very Serious Problems So There Will Be Some Hiccups Along The Way But The Fact Remains, The Numbers Are Very Small.
Lee: So There Is No Bright Line, Is There A Dull Line? I - I Guess Investors Want To Know Whether Or Not The Administration Will Pursue This At All Costs Or If There Is A Is Line In The Sand, Even If It's Not A Bright Line At Which The Aministration Will Say, "say You Know What? This Is Not Worth It." Investors Want To Know If The Administration Has Basically Got A Put Under This Market When It Comes To These Trade Wars And The Impact In The Markets.
Ross: Well, The Last Thing We're Going To Do Is To Announce That There's A Certain Level In The Stock Market That Will Change Policy.
Lee: But Do You Have It In Your Minds?
Ross: That's Not -
Sorkin: Whisper It To Us.
Ross: That's Not How You Make Policy. You Have To Make Policy Based On What's Fundamentally Good For The Economy, What's Fundamentally Good For The Long-term. You Can't Deal Just With Day-to-day Stock Market Fluctuation.
Sorkin: Secretary Ross, I Wanted Your To Help In Terms Of Taking Us Through The Thinking On This Decision Last Week Regarding China, Intellectual Property, And Ultimately Using Cfius Rather Than Some Bright Lines Which Had Been Reported Earlier In The Week That Might Have Been Enacted. Some Of The Market Took It As A Little Bit Of A Step Back In Terms Of How The Government Was Approaching It. Others Said, "look. Cfius Actually Gives The Government Remarkable Flexibility, Maybe To Do Things In Even More Aggressive Ways. But In A Context That Doesn't Feel That Way." What Do You Think Is Going On?
Ross: Well, We Think That Ferma And The Various Legislative Versions That Are Going Through Congress Right Now Are Very Good Pieces Of Legislation. And We Think That They Give Us Plenty Of Tools To Accomplish The Purposes That We Want To Accomplish. So We Think It's A Very Good Example Of Where We Can Work In A Collaborative Fashion With The Congress And Achieve Our Collective End.
Sorkin: But Does It Create More Or Less Uncertainty? Because Without Those Bright Lines, If You're A Ceo And You Have Been A Ceo For A Very Long Time Over The Years, In Terms Of Deciding To Pursue - Try To Pursue A Joint Venture Or A Merger, This Changes That Calculus Without Necessarily Knowing Exactly Where The Line Is, Right?
Ross: Well, The Two Bills, The House Bill And The Senate Bill, Are Relatively Similar So There Shouldn't Be An Awful Lot Of Confusion On The Legislative Side. In Terms Of Filling In The Blanks, What Industries Will Be Affected, As You Know, The President Designated That The Commerce Department Should Do The Research About What Names Should Be Added. What Categories Should Be Added. So It's Not Going To Be Wild Deviation From Where We've Been. But There Will Be A Heightened Emphasis As There Should Be On Intellectual Property And On High-technology Products. In Fact, There Was An Interesting Symbol Of The Importance Of That: A Couple Weeks Ago The President Presided Over A Ceremony Where We Issued The 10 Millionth Patent - American Patent. No Country Has Come Remotely Close To 10 Million Patents. And That Simply Emphasizes The Critical Importance Of Intellectual Property And Especially The Technology Part Going Forward.
Kernen: Hey, Wilbur, Real Quickly. Just - Just To Clarify Once Again With This Crazy - I Saw The Three Democratic Senators Introduced Something About The Short Sale Last Thursday. When You Do A Short Sale, You Don't Own The Stock. You Short It And Then You Cover Later By Buying The Stock To Cover Your Short Position. You Didn't Have A Second Trade To Cover The Trade. Didn't - The Trade That They're Talking About, You Own The Shares But Weren't In Possession Of Them. So You Sold. And So You Didn't Have To Cover The Short. All You Did Was Provide The Shares You Had To Cover That Position That You Borrowed. Am I Correct On That? Then Why Do They Keep - Why Does It Keep Talking About And, I Mean, You Did Benefit From Selling The Stock Before The Negative Article, Obviously. But It's Not Strictly Speaking Shorting The Stock Right?
Ross: No. It Certainly Was Not. All It Was Was A Technical Thing Because I Didn't Have Physical Possession, Didn't Know How Long -
Kernen: They're Still Saying You Did Though. They're Still Saying It In The - I Don't Understand It.
Ross: Well, Fake News. That's All. Fake News.
Kernen: All Right I Wanted To Get You To Say Those Two Words Once. Either Way, Secretary Ross, Once Again We Appreciate All Your Time This Morning On Such A Wide Array Of Subjects.
Ross: Thank You. Sorry We Had - Sorry We Had The Telephone Disconnect.
Kernen: You Should Have -
Ross: But I Hope You Got Your Questions Answered.
Kernen: You Should Have Saved The "i Can't Hear That" To The Short Selling Thing Again. That's When I Would Have - I Would Have Pulled It Out For That Question. Thanks, Mr. Commerce Secretary.
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