By William Mauldin and Ben Leubsdorf 

WASHINGTON -- A top Trump trade adviser on Wednesday emphasized tougher enforcement of existing rules as a way to confront China and other countries, reassuring some lawmakers worried by President-elect Donald Trump's talk of broad tariffs on U.S. imports.

Wilbur Ross, Mr. Trump's pick for commerce secretary, provided the deepest view yet of the incoming administration's likely direction on trade in testimony before the Senate Commerce Committee, which is considering his nomination.

Mr. Ross's testimony on Wednesday covered a dizzying array of topics over four hours, reflecting the Commerce Department's myriad mandates. In addition to its role in trade matters, the agency is responsible for monitoring the weather, overseeing fisheries, issuing patents and conducting the decennial census.

Mr. Ross, 79 years old, mentioned tariffs several times in the hearing, which repeatedly returned to the topic of trade, a campaign issue that defined the 2016 presidential election and has ruffled feathers in the business community.

"I think tariffs play a role both as a negotiating tool and if necessary to punish offenders who don't play by the rules," Mr. Ross said.

The billionaire private-equity investor didn't threaten the unilateral, pre-emptive tariffs on U.S. imports from China and Mexico that Mr. Trump repeatedly warned of during the election.

Such duties would weigh on retailers and boost consumer prices, economists say. Mr. Trump has played down talk of broad tariffs since the election, instead focusing on more targeted penalties on companies that move production offshore. His aides have said warnings about the possibility of big tariffs are part of negotiations to get better terms for U.S. exports.

Mr. Ross didn't rule out the use of broad tariffs, but focused his testimony on the rapid processing of cases against foreign companies accused of benefiting from subsidies or dumping products on the U.S. market below their fair value.

The Trump administration would seek to "self-initiate" such cases, Mr. Ross said, which often lead to punitive tariffs on particular companies or industries, when it makes sense, rather than waiting for the affected industries to bring cases against rivals in China or other countries.

"One of the things that we do need very careful attention to is more tariff activity, the anti-dumping requirements that we should impose on the steel industry and on the aluminum industry as well," he said, blaming China for excess metals capacity.

Mr. Ross's approach to trade appeared to reassure Republican lawmakers who have backed freer trade.

"I was comfortable with the way he addressed those issues today," said Sen. John Thune (R., S.D.), the chairman of the committee considering Mr. Ross's confirmation and a member of the Finance Committee, which oversees trade policy. Sen. Thune said he had been "concerned based on some of the rhetoric that has come out throughout the course of the campaign and from the incoming administration on trade issues," including talk about a broad 35% tariff.

To be sure, Mr. Ross is only one of Mr. Trump's key trade advisers. His picks for U.S. trade representative -- trade lawyer Robert Lighthizer -- and the head of a new White House council on trade -- economist Peter Navarro -- have expressed more hawkish views on breaking with global trade rules to confront Beijing.

And Mr. Trump's decadeslong criticism of trade policy means he is likely to play a commanding role from the White House. "The biggest problem we have is China is so horribly imbalanced in trade with us," Mr. Trump said in an interview last week. "Everything is under negotiation. Everything."

Still, Mr. Ross, a business leader and investor seen as close to Mr. Trump, is set to play a leading role in trade policy that goes beyond the more limited role commerce secretaries have traditionally played, advisers say.

Mr. Trump has boasted that the $2.2 trillion in merchandise the U.S. imports every year gives him leverage to change the behavior of trading partners by restricting trade.

But Mr. Ross described the U.S. trade relationship more subtly to Congress: "My mind-set will be that of the world's largest customer dealing with his vendors," he said in the hearing. "I view these other countries that we have trade deficits as our vendors."

The softer message on trade shows how Mr. Trump's team may be shifting from fiery campaign rhetoric to a more measured position on key issues, including tariffs, where bold moves from Washington could lead to politically damaging retaliation from China and other major trading partners, including through cases at the World Trade Organization.

The new administration's goal will be to strike more attractive bilateral trade agreements -- rather than the multilateral affairs Mr. Obama pursued -- and update the North American Trade Agreement, or Nafta. "I think all aspects of Nafta will be on the table," he said.

Mr. Trump has repeatedly vowed to pull the U.S. out of a proposed Pacific trading bloc that the Obama administration negotiated with Japan, Canada, Mexico and eight other countries around the Pacific.

Mr. Ross said Wednesday he initially approved of the Trans-Pacific Partnership, concluded in October 2015 in Atlanta, but has since found unacceptable language in the TPP agreement's thousands of pages.

For example, Mr. Ross wants more enforceability of trade agreements and stricter standards for the auto industry, meaning that trading partners would have to source more components for vehicles within the bloc to get duty-free trade. The so-called rules of origin may be a focus of Nafta talks in the Trump administration.

Mr. Ross's extensive business ties and investment holdings -- Forbes magazine has estimated his net worth at $2.5 billion -- present a complicated web of potential conflicts of interest in his new position. To avoid any impropriety, Mr. Ross has pledged to resign dozens of positions and divest most of his financial interests upon confirmation.

A formal ethics agreement released this week set forth timetables for selling various assets, some of which were described as illiquid and so could take months to unload. Mr. Ross wrote in the document that he would act "as promptly as is reasonably practicable" and ensure all proceeds are reinvested in bland assets such as Treasury notes.

Mr. Ross's plan won praise Wednesday from Sen. Bill Nelson of Florida, the Senate Commerce Committee's top Democrat. Agreeing to "divest the vast majority of your personal holdings" and resign from boards is "the right thing to do, and it tells me that you are committed to doing the job the right way by placing the public's interests ahead of your own," Mr. Nelson said.

Asked about investments he plans to retain and potential conflicts with his duties as commerce secretary, Mr. Ross said, "I intend to be quite scrupulous about recusal in any topic where there's the slightest scintilla of doubt."

The outgoing commerce secretary, Penny Pritzker, also is a billionaire; her family founded the Hyatt hotel chain. The Senate easily confirmed her for the job in 2013.

Mr. Nelson said the hearing went smoothly, and Mr. Thune said he hopes the Senate can move swiftly to confirm Mr. Ross for the cabinet post.

One revelation at Wednesday's hearing: One of Mr. Ross's household employees had provided a seemingly valid Social Security card and driver's license when hired in 2009, but was terminated recently when Mr. Ross had information for former and current employees rechecked in preparation for the confirmation process.

"We did the best that we thought we could do in order to verify the legality of the employment, and it turns out that was incorrect," Mr. Ross said. Mr. Thune said Mr. Ross was forthcoming with the committee and had paid all relevant taxes for the employee.

--Ian Talley contributed to this article.

Write to William Mauldin at william.mauldin@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com

 

(END) Dow Jones Newswires

January 18, 2017 19:23 ET (00:23 GMT)

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