U.S. Secretary of Commerce Wilbur Ross rattled the market a bit Thursday when he said the U.S. and China are still nowhere close to a deal that could bring about the end to the global trade war. Here’s a sampling of what Ross had to say in the new interview with CNBC.
When asked about the impact the government shutdown is having on furloughed federal workers, Ross said there has been a great deal of hyperbole in the media about the financial impact of the shutdown.
“The 30 days of pay that some people will be out, there’s no real reason why they shouldn’t be able to get a loan against it, and we’ve seen a number of ads from financial institutions doing that,” Ross told CNBC.
“Now, true, the people might have to pay a little bit of interest. But the idea that it’s paycheck or zero is not a really valid idea.”
Democratic House Speaker Nancy Pelosi criticized Ross’ comments.
“When he was asked about people having to go into food lines and pantries and the rest, he says he doesn’t understand why they have to do that. Is this the ‘let them eat cake’ kind of attitude or ‘call your father for money?’” Pelosi said at a press conference.
When asked about a potential trade war with China, Ross said investors shouldn’t be surprised to learn that the U.S. and China are nowhere close to a finalized deal.
"We would like to make a deal but it has to be a deal that will work for both parties," he said. "We're miles and miles from getting a resolution."
Ross said the U.S. trade deficit with China, which grew to $323.3 billion in 2018, is the primary sticking point of negotiations. Despite aggressive U.S. tariffs by President Donald Trump on imported Chinese goods in 2018, the trade deficit with China grew to its largest level on record last year.
Investors are hoping a trade deal will ultimately be good news for U.S. companies, but some critics has suggested any deal that weakens China’s economy will ultimately be a net negative for U.S. companies and global growth as well. When asked about the potential long-term impact of the trade war on U.S. companies, Ross said it’s a complicated situation.
“For one thing, there are quite a lot of companies are relocating production from China. In some cases to the U.S., in other cases to Vietnam and other low-income areas. There had been the beginnings of a move for that even before the trade issues because China is not the world’s cheapest place to manufacture products anymore. But it’s been accelerated a bit by the trade issues because that interjects a note of uncertainty into corporate decisions,” he said.
Ross also said the latest global economic numbers indicate the U.S. economy remains very strong, while economies in China, Europe and Japan are developing “some economic problems.”
The SPDR S&P 500 ETF Trust SPY opened in negative territory on Thursday following Ross’ interview but quickly recovered and was roughly flat in mid-day trading.
White House photo by Evan Walker.
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