U.S. Commerce Secretary Wilbur Ross is downplaying expectations that the ongoing trade war with China will come to an end soon, which is likely to send the stock market reeling again.
Trade talks are set to begin when the two sides meet in Washington again next week, but Ross says the world’s two largest economies are a long way from settling their differences.
“We’re miles and miles from getting a resolution,” Ross said in an interview with CNBC on Thursday. “Trade is very complicated. There are lots and lots of issues.”
“Frankly, that shouldn’t be too surprising,” Ross said in a “Squawk Box” interview. The U.S. and China have “lots and lots of issues,” he continued, and the Trump administration will need to create “structural reforms” and “penalties” in order to resume normal trade relations with Beijing.
“We would like to make a deal but it has to be a deal that will work for both parties,” he said.
Ross listed the sticking points, starting with what he calls America’s “intolerably big trade deficit” with China. That deficit ballooned to $323.3 billion in 2018, according to Chinese government figures released earlier this month. It’s the worst imbalance on record dating to 2006.
“The other problem is the future. That’s the 2025 plan that they have to try to dominate world high tech industries. We have to protect that,” Ross added. “The third area is American companies doing business in China should have market access, should have a level playing field, should not be subject to disrespect for their intellectual property rights.”
Ross joined CNBC from Washington as China and the U.S. try to resolve their trade disputes under a tariff cease-fire that ends March 2. President Donald Trump and Chinese President Xi Jinping last month agreed to halt any new levies to give diplomacy a chance.
When asked whether the U.S. would change its March deadline, Ross said, “it’s difficult to prejudge where we’ll be in that point in time. But as that date approaches, the president and those of us who are dealing with the trade issues will get together and have a very serious discussion on where we stand at that point.”
Trump has said he will reinforce punitive tariffs on roughly half of all Chinese exports to the U.S. should the two parties fail to agree on a permanent solution. In the latest tariff moves, the U.S. levied 10 percent duties on $200 billion worth of goods from China, prompting Beijing to put tariffs on $60 billion worth of U.S. goods. Trump has also threatened to put tariffs are all Chinese imports if a trade deal can’t be reached.
According to recent reports China has offered to buy more U.S. products in the coming years to reduce the imbalance in goods. Under the offer, China would increase its annual import of U.S. goods by a combined value of over $1 trillion over six years, the officials told Bloomberg, which was first to report on the import boost overture last week.