Portman On Bloomberg: The Economy is on a Good Trajectory Right Now
In an interview with Bloomberg’s Daybreak this morning, Senator Portman discussed the economy, the equity markets, and trade relations with China. He voiced concern about China’s unfair trade practices and the need to create a more level playing field on trade with China. Portman also highlighted the importance of independence of the Federal Reserve and the current strength of the U.S. economy.
Excerpts of his interview can be found below and a video can be found here:
PORTMAN ON THE EQUITY MARKETS:
“I think it’s a combination of factors. I think with regard to the Fed, certainly there’s a concern about higher interest rates, but that’s been true really for the past few months. Second, I think there’s a rebalancing going on here. The Dow, as an example, was at 26.3, near record levels, so we have seen the markets go up and up and there has been a concern that we are a little overheated, so I think there was some of that and I also think the tech stocks took a particular hit and probably there’s a little concern in the tech community, again some overheating, and then finally trade, just uncertainty. Although interestingly on trade, you would think there would be more certainty with the so-called USMCA, the new NAFTA 2.0 having been concluded, and really an alliance between the Europeans, us, Japan, and now, Mexico and Canada vis-a-vis China, and in other words, more unity trying to deal with some of the structural deficiencies in the Chinese trade relationship.”
PORTMAN ON TRADE RELATIONSHIP WITH CHINA:
“I think we’ve made some real progress in the last week or so in terms of trade and it’s really, again, trying to ensure that the rest of the world that is a free-market-based economy is with us with regard to our concerns about China and specifically the theft of intellectual property. But there are broader concerns, structural concerns, about the Chinese approach to subsidization, to selling below cost, and you saw at the general assembly, again, this all happened just in the last couple of weeks, countries across the board, the EU, Japan, us, the biggest economies saying we need to work together to ensure that we get China playing by the rules. It’s important to have a good relationship with China, not just a good trading relationship, but for geopolitical reasons. But we need to be sure that we’re looking for a more level playing field, not just on how much they buy in terms of soybeans or LNG or other things, but in terms of some of these structural deficiencies. If you look at the 301 report, this is the U.S. approach to China – unlike 232 on steel and aluminum which is based on national security – it’s based on unfair trade and the unfair trade report, the 301, talks about these structural changes very specifically. I think we now have a better situation because China knows what we are looking for.
“I think you are right, it’s going to take some time. Having negotiated with the Chinese on various issues when I was U.S. Trade Representative, patience is required and some time. I think we can get to the right place because we have now laid out our objectives more clearly and I hope the administration continues to communicate clearly on it. I think for a while it was confusing for China because some of the administration was just saying buy more of our stuff and therefore try to change the balance of trade because we do have a huge trade deficit with China but that really is not what this is about. It’s about ultimately them having a more level playing field on the balance of trade, but it’s really about the structural changes, the licensing agreement that are required, joint venture agreements that are required, the intellectual property theft in other ways, the cyberattacks, so those issues have to be resolved and I think that’s going to take a little time and we have to be prepared for that.”
PORTMAN ON THE STRENGTH OF THE ECONOMY:
“The independence of the Fed is absolutely necessary because this is how our system is going to work most effectively. You don’t want to have political pressure on the Fed. Second, to the president’s point about the economy, the fundamentals are really strong right now. When I’m back home in Ohio, the biggest issue I’m hearing is workers, how do you get enough people in the workforce to help with a growing economy? More investment, lower unemployment, higher wages, all the right things are happening right now. I do think you have a situation where the Fed can create a little space so that when there is a recession, which will happen at some point. I don’t think it’s happening soon, I think the economy is on a good trajectory right now, but you need to have a little monetary space to be able to deal with it. I think what’s happening now with the market is it’s going to go up and down based on various reasons, interest rates may be part of it, China may be part of it. Neither one of those is new. I think the tech issue maybe a little bit bigger factor, but the point is, the fundamentals are strong.”