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Conference Presentation, Panel, Fireside Chat

A Conversation With Wilbur L. Ross, Jr., Secretary, U.S. Dept. of Commerce | Part 2: U.S. Overview

Milken InstituteWilbur L. Ross, Jr., Andy Serwer, Tom Hayes, Kenneth Hersh, John Hickenlooper, Steve Krouskos, Kevin Clouden, Wilbur Ross
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  • The administration anticipates a 30-day extension to the tariff process to achieve specific objectives and expects the 232 national security goal regarding steel and aluminum overcapacity to remain unchanged regardless of the method used.
  • A definitive solution to EU trade discussions is anticipated soon, though currently deemed a work in progress, while NAFTA negotiations are expected to conclude either within the next few weeks or by the fall due to political calendars in Mexico, Canada, and the U.S.
  • Predictions include a "Goldilocks" economic period continuing for the foreseeable future, with specific concerns regarding an expansion lasting over 106 months potentially leading to nervousness after two additional years.
  • Officials expect the space market to grow from $340 billion to a trillion-dollar business driven by reusable rockets, 70 countries, and 1,500 new companies, alongside a shift to accelerate remote sensing regulations to match technological changes after 25 years of stagnation.
  • The administration forecasts that deregulation will drive industrial growth more than tax cuts, with over five million American workers expected to receive bonuses or increased retirement benefits from the tax bill.
  • Concerns exist regarding consumer expenditures growing faster than disposable income, potential risks from increasing consumer and corporate debt, and the likelihood that the full effects of the tax code will manifest within two years.
  • The panel expects no significant harm from trade in principle, though specific impacts remain a matter of negotiation, with warnings that wild fluctuations in expectations pose risks and that a "sunset clause" in NAFTA could create recurring uncertainty.
  • Secretary Ross predicts that Brazil cannot immediately supply 60% more soybeans to China competitively, expects LG and Samsung to expand U.S. production rapidly, and dismisses reports of Chinese announcements on reducing trade surpluses by $100 billion.
  • Plans include using Agriculture Department powers to assist farmers against retaliation, cutting off high-tech exports to ZTE due to sanctions violations, and anticipating that refueling on the Moon will become necessary for Mars transport.
  • Risks identified include the possibility of a "technology Cold War" disrupting supply chains, rising interest rates causing capital market realignment, and the federal government eventually being unable to meet obligations due to debt loads.
  • Concerns regarding the marijuana industry involve potential banking clamps pushing the $1.5 billion sector back to cash-only operations, though tax revenues of $200 million are expected to increase law enforcement spending.
  • Tyson Foods expects to see some business movement regarding trade but anticipates the near-end impact will not be severe pending final resolutions, while remaining focused on organic growth, acquisitions, and international markets.
  • Ken Hirsch warns that low oil prices could become a drag on consumption if geopolitical conflicts flare up, contrasting with previous views, and notes that new infrastructure is needed to transport U.S. oil and gas from the center of the country.
  • Steve Kruskos anticipates that technology will drive continuous portfolio transformation and that 60% of companies will engage in more cross-border deals next year, though antitrust challenges may prevent a record M&A year currently.
  • Governor Hickenlooper fears that removing negotiated agricultural markets could unfairly impact states with declining commodity prices and predicts that infrastructure investments will be difficult without specific federal partnership provisions.
  • Tom Hayes expects the company to be a net job creator relying on technology-driven growth, with blockchain technology anticipated to improve inventory forecasting and remove working capital from the system.
  • The administration expects economic security to justify linking trade issues to national security concerns and views the WTO as an obsolete set of rules benefiting exporters at the detriment of importers.
  • Governor Hickenloper anticipates that the marijuana industry will continue to grow globally and that Democrats focusing on jobs and wages will perform well in midterms, while tribalism remains a major election factor.
  • Steve Kruskos fears that a shift away from post-WWII institutional frameworks due to technology and national security elements will make cost-efficient business models less viable and create uncharted waters for planning.
  • The administration expects that if no new trade actions are taken, trade deficits will continue to increase to an unacceptable level, and anticipates that washing machine manufacturers are already expanding production to contradict fears of tragedy.
  • Governor Hickenloper predicts that the federal government may eventually face debt obligations issues and believes CEOs might prefer a tax rate between 24% and 25% if resources were directed toward long-term infrastructure.
  • The panel consensus expects a continued "Goldilocks economy," though Ken Hirsch notes that the full employment market may lead to contractionary labor pricing and that the $1.5 trillion student loan market is loading up on debt.
  • Tom Hayes anticipates that the tax cuts will allow for accelerated investment in digital transformation and cloud technology, while a balanced regulatory approach is necessary to ensure companies do not relocate while remaining effective.
  • Ken Hirsch predicts that the U.S. is less captive to Middle Eastern oil supplies, receiving only 1.5 million barrels a day, which has liberated foreign policy options, though low oil prices may negatively impact consumption if conflicts arise.
  • Governor Hickenloper does not anticipate running for president in 2020, preferring to focus on workforce training and apprenticeships, and believes legalization has not caused significant spikes in teenage consumption.
  • Steve Kruskos expects an M&A activity uplift in the medium to long term if the infrastructure equation is resolved and tax reform legislation is better understood by companies.
  • The administration expects the Chinese population saves more than Americans due to a lack of social safety nets rather than trade surpluses being beneficial, and predicts that the Chinese will not push back on reducing their trade surplus as reported.
  • Governor Hickenloper fears that the new administration may clamp down on banking for the marijuana industry, which could push the $1.5 billion industry back into a cash-only environment.
  • The panel generally expects the "Goldilocks economy" to continue for the foreseeable future, with Steve Kruskos specifically anticipating it will last.
  • Ken Hirsch predicts that the full effects of the tax code will be worked through the system in "probably two years," at which point a new normal will emerge with potential negative consequences.
  • Governor Hickenloper fears that the tax cuts borrow from future generations and that the subsequent spending expansion is unhealthy, predicting that the "piper" will eventually have to be paid.
  • Tom Hayes expects that blockchain technology will help take working capital out of the system by improving inventory forecasting and creating seamless flows with customers.
  • Steve Kruskos anticipates that 60% of companies surveyed will do more cross-border deals next year than last year, despite populism, due to technology making the world smaller.
  • Ken Hirsch predicts that low oil prices will become a drag on the consumption part of the economy as geopolitical conflicts flare up, contrasting with previous views where low prices were a net benefit.
  • Governor Hickenloper predicts that the legalization of marijuana has not resulted in significant spikes in teenage consumption, though he anticipates that more data is needed for other states before they adopt similar measures.
  • Tom Hayes expects that the marijuana industry could be a growth part of his company's business, particularly regarding appetite stimulation, though he notes the company is focused on food.
  • Governor Hickenloper anticipates that he will not run for president in 2020, preferring to finish his current term with a focus on workforce training and apprenticeships.
  • Ken Hirsch expects that the U.S. is no longer as captive to Middle Eastern oil supplies (receiving only 1.5 million barrels a day) as it used to be, which has liberated foreign policy options.
  • The panel generally expects the "Goldilocks economy" to continue for the foreseeable future, with Steve Kruskos specifically anticipating it will last.
  • Ken Hirsch predicts that he will get nervous about the economy if the current expansion continues for "two years" beyond the current 106 months.
  • The panel expects to see "no harm" on trade as a general principle, though specific impacts remain a matter of ongoing negotiation.