Former Commerce Secretary Wilbur Ross said Trump’s tariff plans could usher in a new era of free trade.
On Inauguration Day, President Donald Trump issued a memorandum that said he will implement “a robust and reinvigorated trade policy” to bolster investment and productivity.
A month later, the president imposed 10 percent additional tariffs on Chinese goods, 25 percent levies on all steel and aluminum imports, and 25 percent import duties on Canadian and Mexican exports entering the United States. The new administration has also initiated the process of implementing reciprocal tariffs on all U.S. trading partners.
While a chorus of economic observers and public policymakers have expressed concerns that these actions could rekindle the inflation flame and weigh on growth, a former senior official from the first Trump administration said it will lead to long-term gains for the United States.
Former Commerce Secretary Wilbur Ross stated that Trump’s tariff plans could lower global tariffs and reduce the risks of future trade disputes, effectively ushering in a new era of free trade.
“In theory, it would convince other countries actually to lower their tariffs because they would then automatically get lower tariffs from us than what they otherwise would have,” Ross told The Epoch Times on Feb. 20. “So, it may seem a strange way to get to low tariffs, but it’s conceivable that that’s what this could result in.”
Market watchers have warned that the White House’s pursuits could ignite a worldwide trade war as other nations have vowed to retaliate with tit-for-tat measures.
Ross doubts this will happen because of weakness in the global economy, particularly among North American trading partners.
Although Canada has been able to avert a technical recession, gross domestic product (GDP) expansion has been anemic for the last two years, with quarterly growth ranging between negative 0.1 percent and 0.5 percent since the second quarter of 2023.
In a Feb. 21 speech before the Mississauga Board of Trade and the Oakville Chamber of Commerce, Bank of Canada Gov. Tiff Macklem warned that the Great White North would endure “a structural change” should Trump’s tariffs remain intact.
“We may eventually regain our current rate of growth, but the level of output would be permanently lower. It’s more than a shock, it’s a structural change,” Macklem stated. “With exports to the United States accounting for roughly one-quarter of our national income, the shock would be felt across Canada.”
Mexico’s economy contracted 0.6 percent in the fourth quarter. Central bank officials also lowered their 2025 GDP forecast to 0.6 percent from percent, citing uncertainty surrounding U.S. policies.
These developments support Ross’s conclusion that the odds of an immense trade spat are low. “Other countries can’t afford a trade war with us,” he said, adding Canada’s and Mexico’s economies are a fraction of America’s size.
“That means $1 of pain that we inflict on them is something like 10 times as damaging to their economy,” Ross added. “It would be extremely destructive of their economies and much less destructive of ours. I have some optimism that even though there would be a fair amount of turmoil in the beginning, it’s quite possible that the ultimate effect would be much closer to free trading than we would ever otherwise.”The former Trump administration official says the World Trade Organization’s role would greatly diminish in a global economic landscape of reciprocal tariffs.
A cornerstone of the World Trade Organization (WTO), is facilitating global trade and ensuring the “most favored nation” trading principle remains intact. The most favored nation concept requires all WTO members to treat all other nations equally in trade. If one country agrees to a lower tariff rate to one WTO member, then, in theory, the nation must provide the same trade advantage to the rest of the body.
The WTO estimates that 80 percent of global merchandise trade is conducted on a most-favored-nation basis.
Over the years, the institution has granted exceptions and exemptions, whether due to preferential trade agreements or preferences of developing countries.
“It would take the WTO out of business because their main thing is the most favored nation clause, and for them to be the resolver of disputes with this formulation,” Ross said. “There really is no need for and no useful purpose for a WTO.”
WTO officials have acknowledged that the global body needs to adjust.
At last week’s General Council meeting, Norway’s outgoing ambassador to the WTO, Petter Olberg, urged members to discuss reforms and fundamental changes in this “new reality.”
“We must all understand that some of our fundamental values and principles are being challenged,” Olberg said. “It’s not business as usual anymore for any of us. It’s not the time for any of us to insist on old positions or speaking points. We must engage in real dialogue.”
Saqer Abdullah Almoqbel, Saudi Arabia’s ambassador to the WTO, also accepted that members are “keenly aware” of the seismic shifts that are unfolding in the world economy.
“The global trading landscape is undergoing profound changes, driven by economic uncertainty, geopolitical shifts, technological advancement and an urgent imperative for sustainable and inclusive growth,” he said. “These dynamics demand that we, as a membership, work together with renewed momentum and unity to ensure that the WTO remains a cornerstone of the rules based multilateral trading system.”
While Trump has been quiet about the WTO in the early days of his second term, he and trade officials from the first administration repeatedly lambasted the organization.
In an April 2018 interview with Bloomberg News, Trump threatened to withdraw the United States from the WTO over its treatment of the world’s largest economy.
“If they don’t shape up, I would withdraw from the WTO,” he said.
Ross, during his tenure as head of the Department of Commerce, was also vocal about demanding reforms at the WTO.
The previous administration, too, has raised concerns about the WTO’s efficacy as the referee in the global trading system.
Former U.S. Trade Representative Katherine Tai proposed modernizing the group and urging members to present reform ideas.
“The WTO and the multilateral trading system’s rules were never meant to be immutable or static,” Tai said in a Sept. 2023 speech at a Center for Strategic and International Studies event. “Right now, being committed to the WTO also means being committed to a real reform agenda.”