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00:00It's clear the US wants to narrow its trade deficit. But how do you decide what is a bad deficit. Well I think most economists will tell you that the trade deficit or the trade balances or the function of broad Nikkei macroeconomic factors like savings and investment rates differential growth rates. It's not really the function of trade policy and in fact the recent tax cuts here in the United States are likely to increase the trade deficit as will of high levels of growth. If the Trump administration is successful in achieving their growth target so it's not a great metric for economic policy because it's really affected by broader issues. Paul Ryan speaking just a few minutes ago saying that he would prefer a more surgical more targeted approach because you know to your point this isn't the way to solve problems that are associated with China's relationship with the US and so on. What power does Congress have if persuasion doesn't work Ambassador. Well the president has a lot of power here to do this on his own. Congress could take action and put in a rider to a must pass bill that says that the administration cannot spend any money imposing these tariffs. That's a pretty draconian action it would take a lot of support to get that there. I'm not sure they'll get there but I think that's why they're focusing on trying to persuade the president to take another approach. I think we have to stipulate that we all want a strong steel and aluminum industry in the United States and there is a global problem of overcapacity but most of the problem can be traced back to China and this action does little if anything to effect the China issue. And in fact puts the spotlight on the US isolates the US has now being viewed as a protectionist power in the world as opposed to putting the focus on China where it really belongs right in China something like the 11 largest country from which we get imports of steel. How do you fix that with a trade action can you fix it with a trade action. Well on on on steel from China the U.S. industry is already very effectively used our trade remedy laws anti-dumping countervailing duty laws to keep out Chinese steel. And so that's why it's only the 11th largest source of imports here. I think the focus has got to be building an international coalition to put pressure on China to eliminate its overcapacity in its country. And that's the only way to really get at this issue. This trade action I think makes that more difficult not not easier .

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Former USTR Froman Says Trump Has Power to Do Tariffs on His Own

Former United States Trade Representative Michael Froman discusses trade deficits, President Trump's proposed tariffs on steel, and U.S.-China trade relations on "Bloomberg Markets." (Source: Bloomberg)

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