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Commerce Secretary Ross says market is realizing the tariffs are bargaining chips for better trade deals

  • Commerce Secretary Wilbur Ross said the South Korea trade agreement portends well for potential agreements with other countries.
  • He said the Trump administration is also making progress with the European community and China.
  • Financial markets last week reacted violently to trade action against China, but were soothed by comments from Steven Mnuchin that he was hopeful for a negotiated agreement.
Secretary of Commerce Wilbur Ross
Joshua Roberts | Reuters
Secretary of Commerce Wilbur Ross

Commerce Secretary Wilbur Ross said the trade agreement with South Korea would never have happened without U.S. tariffs and that portends well for potential agreements with other countries.

He said the Trump administration is also making progress with the European community.

Ross said there has been dialogue with China and it is ongoing. He said China's response to $50 billion in proposed U.S. tariffs on Chinese goods was "well modulated."

Financial markets last week reacted violently to the U.S. trade action against China but were soothed by comments from Treasury Secretary Steven Mnuchin that talks are underway, and he was hopeful of a negotiated agreement.

"I think what the market is starting to get used to is we are not suicidal. This is not some mission to blow up the world," said Ross.

Ross said the agreement was sensible for both the U.S. and South Korea and stabilizes the relationship between the two countries.

"We're an administration that believes in objectives. We never would have gotten where we are now without tariffs," Ross told CNBC shortly after he left the stage at the Saudi-US CEO forum.

He said while there will still be a trade deficit, South Korea made important concessions on steel, which he said were about equal to what the tariffs would have done.

"It's was a very quick deal with a very tough trading partner," Ross said. "I think, frankly, while the market has rallied, it does not give enough credit for what this represents and for what it might portend."

Ross said the talks between the U.S., Canada and Mexico on renegotiating the North American Free Trade Agreement are now focusing on the harder issues.

"We have a political calendar we are fighting against," he said. Ross noted Mexico's presidential election is July 1, Canada's parliamentary election is in June, and the U.S. fast-track authorization expires in July. Also, the U.S. midterm elections are in November.

Ross said he could not predict whether negotiators would be able to come to a resolution ahead of Mexico's election or whether they would drag on for months.

Ross told the audience at the CEO summit that Americans never complain about how they are treated by Saudi Arabia "the way you do with many other countries."

There were more agreements between U.S. companies and Saudi Arabia Tuesday. That followed a large number of commitments last year, when President Donald Trump visited the kingdom.

Saudi Crown Prince Mohammed Bin Salman is currently visiting the U.S. to strengthen relations and investments.

Ross said the big deal that has yet to be decided by Saudi Arabia is for billions of dollars in nuclear power plants. He said the kingdom is expected to decide who will get the deal next month.

He said Saudi Arabia has 5 percent of the world's uranium, and it makes sense for Saudis to build nuclear power plants.

— CNBC's Lori Ann LaRocco contributed to this story.

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