On Friday, Commerce Secretary Wilbur Ross, who is a billionaire, appeared on CNBC’s Squawk on the Street to defend steel and aluminum tariffs he has promoted. While he was interviewed, he displayed his utter ignorance of political optics, holding up a can of Campbell’s soup to illustrate what he called the “broad,” but “trivial” consequences of implementing price tariffs.
Ross began, “This is not the first time we’ve put tariffs on steel; we have tariffs on many forms of steel. The reason we’ve had to go this route is that the conventional trade methods don’t solve the problem of systemic global overcapacity and global dumping. You put a tariff on it coming from one country, they try to ship it through another one. So it has to be broad, it has to be global in its reach in order to solve the fundamental problem.”
Holding up the can, Ross opined, “This is a can of Campbell’s soup. In a can of Campbell’s Soup, there are about 2.6 pennies worth of steel. So if that goes up by 25%, that’s about six-tenths of 1 cent on the price of a can of Campbell’s Soup. I just bought this can today at a 7-Eleven down here, and the price was $1.99. So who in the world is going to be too bothered is going to be bothered by six-tenths of a cent?”
After holding up a can of Coke and going through a similar procedure, Ross concluded, “All this hysteria is a lot to do about nothing.”
There have been plenty of critics of implementing steel tariffs. As USA TODAY reports:
The American International Automobile Dealers Association said it fears that the tariffs would send car prices up “substantially.” U.S. auto sales plateaued in 2016 at 17.5 million vehicles a year. … “You start throwing in higher prices from more expensive steel for automakers — that’s going to start to pile on multiple factors that could really slow down U.S. car sales,” says Karl Brauer, executive publisher for Kelley Blue Book.
As far as helping the steel companies, Mark O’Hara noted at Market Realist:
Despite the slowdown in steel prices in 4Q17, steel companies posted higher earnings. Steel Dynamics (STLD) reported record operating income last year, and Nucor’s (NUE) 2017 earnings were its highest since 2008, when the steel industry was at its cyclical peak. U.S. Steel’s (X) 2017 earnings were also its highest since 2014.
But Ross attacked critics of the implementation of tariffs: “I think this is scare tactics by the people who want the status quo, the people who have given away jobs in this country, who have left us with an enormous trade deficit, and one that’s growing. It grew again last year, and if we don’t do something, it will keep growing and keep destroying American jobs.”