Critics of President Donald Trump’s tough new tariffs on steel and aluminum are exaggerating the hit that consumers of those products will take, Commerce Secretary Wilbur Ross said Friday.
While steel and aluminum manufacturers cheered the tariffs that Trump formally implemented Thursday, other manufacturers have howled that higher prices for those raw materials would spark price hikes for consumers.
Ross pushed back on “The Laura Ingraham Show” Friday.
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“Well, let’s do the arithmetic … In total, these tariffs are about $9 billion,” he said. “That’s less than one half of 1 percent of our economy. So I don’t think there’s very much impact that will be felt from this.”
What does that mean in practice? Ross estimated that a 25 percent duty on imported steel might add $4 a month to the typical car payment and less than half a penny to a can of Campbell’s soup.
“Same thing for a can of beer,” he said. “Same thing for can of soda. This is a rounding error in the overall economy. And you notice none of these people who say it will do damage quantifies it. I’m quantifying it.”
How about a trade war, as critics have warned about?
Ross said that has been exaggerated as well. He said American exports that the European Union has considered imposing as retaliation total some $3.5 billion. He said that even if this reduced exports of those products to zero — an extremely remote possibility — it would amount to two-tenths of 1 percent of the economy.
“So, I think these people are all crying Chicken Little,” he said.
For example, an American car going to China pays 25% import duty, but a Chinese car coming to the US only pays 2.5%, a tenfold difference
— Elon Musk (@elonmusk) March 8, 2018
During the ceremony Thursday, Trump noted that business executive Elon Musk had tweeted that a car exported from the United States to China faces a 25 percent tariff, while a car shipped in the other direction enters the American market with a 2.5 percent duty.
“And it isn’t just China,” Ross said. “The EU charges a 10 percent tariff on our cars as well. And that’s four times the tariff that we charge on their cars coming in here.”
If a trade war does come, Ross said, the United States is better positioned than its trading partners.
“If you go into a trade war, we are the ones who go in with the deficit,” he said. “They go in with the surplus. And in the case of Europe, it’s over $100 billion a year, and therefore, they have much more to lose in a trade war than we do.”
Ross also disputed a favorite talking point of tariff opponents, who compare Trump’s actions to the Smoot-Hawley tariff, which Congress passed in 1930. Economists generally blame the tariff for deepening the Great Depression.
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Ross said that law was a “blunderbuss” that affected thousands of imports simultaneously from every country in the world.
“Second thing, it was done when we were already in a global depression,” he said. “So it was poor timing. Right now, we’re in a period of global expansion. Third difference is, when the U.S. put in Smoot-Hawley, we had a trade surplus. So we had more to risk than the other parties.”
Whether it is the economy or North Korea, Ross said, people should look past Trump’s unorthodox tactics.
“What people ought to do is judge this president based on results this achieves, not some theory that there may be problems with the method he’s using,” he said.