Donald Trump’s appointment of billionaire Wilbur Ross to secretary of commerce signals the president-elect’s commitment to forging ahead with campaign promises to play hard ball with trade partners, says an investment expert.
Ross argued in September that the North American Free Trade Agreement should be renegotiated and his ideas were the foundation of Trump’s trade campaign policies.
Ross, who made his fortune buying, restructuring and selling failing companies, has proposed a 20 per cent tax on imports into the United States. But like Trump, he opposes any tax imposed on American exports.
“Trump is a populist and he’s renowned now for contradictory statements that can’t be reconciled,” said James West, who publishes a Toronto-based monthly investment publication called the Midas Letter.
“While they complain about nations imposing a value-added tax at the border for American goods, they are prepared to do the same thing as a way to make America great again.”
He expects Trump’s administration to “trample” on NAFTA and then make “crazy demands for trade that no other country can make.”
But a Trump administration won’t be all bad for Canada, West said on CTV’s Your Morning Friday.
If he follows through on his promise for a massive infrastructure buildout, that will boost Canadian minerals. A potential exodus of Americans could also lift real estate prices, West said, citing the word from the University of Toronto that inquiries from tenured American professors are at an all-time high.
Ross has accused U.S. trading partners of using value-added taxes and rebates to their own exporters (such as Canada’s GST) as an economic advantage that lures American companies to move offshore. The United States has no value-added sales tax.
Canada was rarely mentioned in Trump’s public condemnations of NAFTA, with Mexico taking most of the heat.
Ross is among a cluster of tycoons Trump has appointed to cabinet posts, including former Goldman Sachs executive Steve Mnuchin to treasury secretary and Ameritrade heir Todd Ricketts to deputy commerce secretary.
Those men are opportunists, says West.
“They are going to be biased toward American outcomes far more so than would be a fair-minded leader. A great presidential leader understands that a good deal is fair for everybody.”
If you create too great an advantage for yourself, it’s not sustainable for your trade partners, he said.
Ross, 79, and Trump, 70, became friends when Ross was involved in the rescue of one of Trump’s failing casinos. Ross’s modus operandi is to take a bankrupt company and either strip it and sell it for parts, or merge it with another clunker to resell at a profit. Fans say he’s saved American jobs, critics say he’s capitalized on the hardship of workers.
“His expertise is making a purse out of pig’s ear and if you look at the state of the U.S. economy, that’s pretty much what it’s going to take, is rescuing a nation, arguably, that is on the brink of bankruptcy,” said West.
But he added that the office of the commerce secretary has historically been a “backwater” post, designed to promote American trade and companies but lacking power.
“The idea that Wilbur Ross is going to come in there as an activist commerce secretary is a little bit perplexing. So one has to question exactly what level of effect he is going to be.”
