Billionaire investor Wilbur Ross sought to calm fears about US president-elect Donald Trump’s trade practises, energy policy and economic measures as he addressed a shipping finance conference in Manhattan this morning.
Ross, who is both a shipping investor and a senior trump policy advisor, told the annual Marine Money Ship Finance Forum that fears over the Republican’s shock victory were overblown.
Still a bit weary only hours after Trump clinched in the wee hours of the morning, Ross confessed the scope of the GOP triumph had caused him to depart from a couple of prepared speeches he had prepared.
“People say he’ll make World War III in trade and bring about a global depression — that’s not at all what he has in mind,” Ross said in a largely unscripted address.
Devil in the detail
Much of the worry over Trump’s approach stems from what Ross called “a misquote” suggesting he would “put a 45% tariff on everything coming out of China.”
Trump’s actual remarks were more nuanced, Ross said, and referred to a potential tactic in the event that Chinese currency is undervalued by as much as 45% and the country is unwilling to negotiate its trade imbalance with the US.
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“Then it may become necessary to threaten them with a 45% tariff,” Ross said. “That’s one negotiating strategy. It’s not the words of a madman who’s going to throw tariffs on everything.”
Trump’s approach will not resemble the overwrought regulations imposed in the US in the early 1930s in reaction to the Great Depression, he said.
“What there will be instead is negotiations product-by-product and country-by-country in a very systematic way, and our country adopting the mentality of a large industrial customer,” he said. “One thing he’ll do is play off suppliers against each other.”
Ross, who has been dubbed the “King of Bankruptcy” for his turnaround triumphs in other industries, entered shipping through investments in Diamond S Shipping, a Connecticut-based owner of products tankers and suezmaxes; New York-listed Navigator Gas Holdings in liquefied petroleum gas, and his Transportation Recovery Fund.
Shipping specific
In remarks specific to the impact on shipping, Ross maintained that the industry does well when demand is boosted by increased consumption from the West, and that will be addressed as Trump works to reduce the US’s $40bn trade deficit with the rest of the world.
“That is going to change,” Ross said.
In one specific example, Ross said Trump will have more positive policies toward energy production than vanquished Democratic opponent Hillary Clinton, and in comparison to the Obama administration.
This will allow greater development of liquefied natural gas production and shale oil from the US. Even today, the US has a surplus of LNG and would like to direct some to trade partners that currently import the product, but not from America.
“It would be no sacrifice for them to redirect from where they’re buying now to the US,” Ross said. “It wouldn’t cost them anything.”
Ross also discounted chances of a trade war with Mexico. But something must be done about a trend that saw a US trade balance with the southern neighbor go from an annual surplus of $4bn-$5bn before the North American Free Trade Agreement (NAFTA) to a deficit of $1 trillion today.
“Mexico and others have gotten too much of a free ride,” Ross said. “I’m not anti-Mexican at all. I like Mexico and Mexican people and so does Donald. (But) it’s not acceptable to have that kind of swing from surplus to deficit.”
Trump’s thoughts toward the US cabotage regime called the Jones Act are likely neutral: “I don’t think he has a particular feeling one way or the other.”
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