Former Commerce Secretary Wilbur Ross joins to discuss the state of the U.S. economy under President Donald Trump's second term.

Former Commerce Secretary Wilbur Ross appeared on a news program to discuss the recent decline in the US trade deficit, which reached minus $52 billion, the lowest level since June 2020. Ross credited the improvement to a combination of lower taxes, reduced interest rates, lower oil costs, and deregulation, as well as the effects of tariffs and capital spending in artificial intelligence.

Ross also addressed why many economists' predictions about the trade deficit were inaccurate, attributing it to their theoretical approach and lack of practical understanding. He explained that the impact of tariffs is often mitigated by exporting countries, importers, and retailers absorbing costs. Ross expressed optimism for continued economic growth and further reductions in the trade deficit.

Trade deficit comes in lower than expected

former Commerce Secretary Wilbur Ross. Mr. Secretary, oh, it's a pleasure to see you. Welcome to the show tonight, sir. Nice to be out with you, man. You know, your thoughts, because we just heard the President in the Oval Office talking about these record high stock market S&P 500 back up today, people looking at the AI gains, but obviously people wondering if that's gonna trickle down to the middle and lower classes as well. What do you think about one of your successors there, Howard Lutnick, saying we're entering the golden age, sir? Well, I think we will be, because of the three prongs to the President's program. The lower taxes, the lower rates of interest, and especially the lower cost of oil. Everybody notices what it costs them to fill up a tank, and anybody who doesn't think that's a lot lower than it was under Biden is simply wrong. So he's made a lot of progress in those, but I think the more important parts are on the upside. The deregulation cuts the cost of doing business, and it makes it easier for business people to make aggressive decisions, decisions about long-term capital spending. And right now, the big bulge in capital spending is AI, which I believe will go on for a few years, and will not ultimately cost jobs. It will just redefine the nature of the jobs. That's been the history of technological innovation. Yeah, you know, it's- And couple all those with deregulation, and you've got a pretty powerful package. Yeah, you know, it's interesting, because Gary Cohn, one of your former colleagues inside the Trump administration there in the first term, made some similar points earlier today that he thinks innovation in AI is gonna create a whole bunch of new jobs, and that we've seen that at every turn in terms of innovation. I think you're making some really strong points. Another area you know well is trade. I turned on CNBC this morning, and find out that the experts, quote-unquote, were wrong again. Watch. That's a better, lower trade deficit than we expected. We were looking for a number closer to 62 billion, and that follows a revised minus 59 billion. Minus 52 billion would be the lightest going back to, wow, we're really going back. Well, my records go back to 1992, and to find a smaller number than minus 52 billion, we're all the way back to June of 2020. Rick Santelli, as you know, covers a lot. He's going through his papers. I can't find a better time for the trade deficit, meaning we're doing better than China and all these other countries. How are the experts always wrong when Trump steps up like that, sir? Well, you have to remember, most of the so-called experts in the form of economists are left-wing, so their whole system of beliefs is being threatened by Trump because these people don't understand really how the economy works. They're just good at the textbooks and theories, but they don't really understand. And why they got wrong the trade deficit, as you know from some of the things I've been saying right along, three things happen when you put in tariffs. First, the exporting country typically increases its subsidies, so that absorbs part of it. The importer absorbs part of it. And finally, the retailer absorbs part. So there's some left over for the general public, but it's nothing like the gross total. Got it. Plus, with all the exceptions the president has put in, the tariff rates are themselves lower than what they might've been in the very, very beginning. So I'm not at all surprised, and I think you're gonna see further shrinkage in the trade deficit. Yeah, very. Because a lot of these things weren't fully in effect back then, and there was some buying by importers trying to get ahead of the tariffs. So there was some distortion coming in. Yeah, absolutely. I don't think there's any question that next year is going to be a good, strong year. Well, your lips to God's ears. There's a lot of people watching tonight all around this great country who wanna see that rebound, make sure it trickles around, not just to Wall Street. Wilbur Ross, the very distinguished former Commerce Secretary. We gotta do this more often. Thank you, sir. Thank you, Ed. Good to be on, and Merry Christmas. Merry Christmas to you and your wife.

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