Trump is serious about stronger tariffs: Wilbur Ross

welcome to a new episode of Yahoo finance's opening bid I'm Yahoo finance executive editor Brian sazy now let's make some money and and hopefully get a lot smarter and I know we will be able to do all of those things with our very special next guest former Secretary of Commerce uh Mr will baross Mr secretary good to see you thanks for coming down for us so early in the morning we appreciate it well it's early and it's rainy but that's all right no it's great and I love that you came in here reading physical newspapers you won't see that on camera but there is still something to touching a newspaper well well there is I think it's enjoyed by fewer and fewer people I know so you uh I loved your new book and I actually I told I read it from from front to back and I love the story as you told new book risks uh and returns creating success in business and life and I really enjoyed your stories on how you got ahead uh in your career maybe you could share some those with us uh because I think it sets a tone on a lot of things that you've been doing the past decade of your life well that's true when I started out life I was very scrawny and undersized for my uh age so I was a perfect victim for bullies but by and by my father got me a punching bag and some instructions and that had two effects I didn't have to use the punching too much much but it gave me a self-confidence and when you radiate self-confidence bullies don't come up to you so much and part of my problem with the current Administration is they're not projecting strength they're projecting weakness and I think that encourages the bullies whether you call Russia or China or Iran encourages them to go forward and press more press more I think we should be following Teddy Roosevelt's ideas speak softly but carry a big stick they talk loudly and carry a little tiny stick it's the wrong combination of big and little so talk to us about you know your career on on Wall Street uh some of the things that you did I guess some moments that stood out well uh I went directly to Harvard Business School from Yale and then I had to go into the military cuz I had been rooc at Yale and they gave me a deferment to let me go through business school so I did got hired by a very go-o money manager called Emy Dev and he agreed let me delay my entry into his firm until I served out my military time was originally supposed to be only six months active year and a half in reserves but Along Came the Cuban Missile Crisis so that added another year to my Tour of Duty during which at the very end about two weeks before I was to show up my new boss died and on his deathbed he sold the firm to Robert winthrip very wealthy Massachusetts man so it became uh winr de about two weeks into it uh Along Came Jack dorren who then was CEO of Campbell Soup and he and his pension fund represented $3 billion of what we had under management this is way back in the 1970s so you can imagine that was a huge sum in those days anyhow so we have this very cordial lunch and then Jack dorren says to Mr winthrip Bob why do we have so many shares of Lucky Friday Silver Mines in our portfolio and Mr winr turned to me and he said Wilbur do I have lucky Friday in my portfolio and I said yes sir all of our portfolios have lucky Friday and explained why dorrence listened for a little while then he said okay I understand that well thank you for a nice lunch he left the following Monday they pulled the $3 billion out so that was a big blow so that week Mr winthrip was at a City Bank board meeting he had been on the board of City Bank for quite a while so dick Perkins who then was the CEO said well Bob I have a solution for your problem Sam Milbank wants to withdraw his capital from woodst Brothers nice Old Line firm if you just buy out his Capital they'll make wood strs and wiri and you won't be embarrassed about lucky Friday Silver Mines anymore so couple weeks later change jobs again at least by now I had gotten a couple of paychecks so it was better in the beginning um Wood Brothers being a conservative firm decided to liquidate the Venture Capital fund that was part of our operation they fired everybody there made me an officer which I thought you it was pretty good that was now what the fourth time of changing jobs and I haven't changed my seat yet so I spent the next couple years cleaning up the portfolio liquidating some of the bad companies selling some of the good ones and it taught me a lot taught me how to deal with banks on a workout taught me how do you keep a thing alive when it's really struggling so it turned out it was excellent training for what I was going to end up doing later on but it also illustrates a moral it this was a series of problems to me you can imagine a young kid all these changes occurring in a very very short period of time and now I'm working in a field I really don't know anything about for people I don't know and never sought a job so was a little bit of strange circumstance but it worked out pretty well and so I had a very good learning experience from it and the moral of that story is those were challenges each of those changes but within those challenges there lay opportunities and I think when people are confronted with challenges instead of throwing up their hands and running to a safe room or something like that they ought to think through and say well is there something here that I can take advantage of is there something here that I can use to advance myself either as a person or as a career that's the mindset that you need to have for Success not weeping and moping not complaining about how unjust the world is world is unjust not complaining about about my bosses are dope a lot of bosses are dopes but if you let that wear you down you're going to be no place you're going to be sitting in that same seat years from now I just want to say for the record I love my bosses at Yahoo finance and Yahoo they're great Mr Ross they're they're awesome they're just good people and it's interesting that you say you know they often say that life comes full circle and you tell a story in in the book uh risks and returns creating success in business and life uh about negotiating against uh former president Trump I mean he wasn't the former president he was a real estate uh investor at the time with the Taj Mahal yes what was that like well it was a fascinating experience I had now been doing bankruptcy work for quite a few years before the Taj Mahal came along so I had a very good clientele of the insurance companies and the banks and the big funds um Trump Taj Mahal is ued 800 million of bonds in the beginning of the year and as you know bonds typically pay coupon every 6 months this Bond never paid a coupon so naturally the bond holders were very upset they hired me as their advisor to try to claw back some value so they hired me the Thursday before Labor Day weekend and as soon as Trump heard it he called me up and he said you got to come down to Atlantic City tomorrow and we'll start working on due diligence and the restructuring well the last thing I wanted to do was to go to Atlantic City on Labor Day weekend I wanted to be out in Southampton which was where I normally was but I felt I had to live up to that I couldn't say no I'm just not up to coming down the next day so I went to the old 63rd Street Hort and there was this big gleaming helicopter about the same size as the Marine one that the president uses and this one the way I could tell it was the right one on the side had 6 foot high nail polish red letters t r u m p so I F well okay at least I know which helicopter you're in the right place I have to get on so 30 or so minutes later we land at the pier in Atlantic City and the Taj by then was relatively complete and it was in operation so Trump was there in a big stretch limo to pick me up and take me to the casino I noticed as I got into the car there were two flags on the front bumper one was an American flag the other was a trump flag a trump family crest flag and I noticed the Trump flag was ever so much bigger than the American flag so that was an interesting yeah phenomenon anyhow so we get into the casino and it's mobbed with people and they're really excited to see him there because he had become kind of a cult figure sure in that community so one sec Mr secretary we're going to go for a quick break I want you I want to continue that story one we'll be right back on opening [Music] bid all right we're here uh we're really spending some uh really quality time with a former Secretary of Commerce Mr will bar Ross really telling a good story of uh negotiating against the former president uh back with the Taj Mahal and you were trying to restructure I mean pick up where you left off well we get inside the casino and people are having him sign their hat sign their notepad one lady had a beback dress she had him sign her back now what on Earth she was going to do with Donald Trump in magic marker on there were no phones back then either couldn't even take a photo I I don't know but if you see a lady walking around like that you'll know it's the same one anyhow so then we go upstairs to start the serious discussion and Trump said the bonds are trading about 20 cents on the dollar and your clients are going to be very lucky if they even get 20 cents so let's not waste a lot of time negotiating we'll get you 20 cents just agree to it now I said well Donald the problem is the bond holders want 100 cents plus power plus control of the company so we debated this back and forth for a couple hours and finally I we were making no progress so I finally said well Donald is that it that's as far as you are prepared to go right now and he said yes that's it 20 cents so I said well that's the case I'm not going to waste my time here and I walked out on him and he tells the story to this day because that's the kind of thing he's used to doing in negotiating and it shocked him a little bit that somebody would do that to him so the days and weeks go by and we grab gradually making a little progress a little progress but he's a very patient negotiator and he was in no great rush to make a deal so we finally got to where we were fairly close but we still weren't there and then it became a very public bickering he announced he was going to tell the bond holders to fire me because I was crazy in my request and and I said well Donald Trump is trying to get a Christmas present from the bond holders and it's not anywhere's near Christmas fact it's not near Halloween so the trick or treat that he's trying to play is premature so we have that kind of back and forth match few more weeks go by now we're getting very very close and finally one morning I went over and said Don here's our best and final proposal and if it doesn't work for you we're going to put you in bankruptcy and then we'll fight it out in in the courts he still didn't give in so I went back to my office drafted up a press release which said the bond holder Committee of the Taj Mahal was calling a press conference at the Marriott Marquee for 5:00 that night Reon we picked the Marriott Marquee is it wasn't one of his hotels at the time he was very involved with the Plaza Hotel anyhow so he sees this on the newswire and he calls me he says what is this what kind of PR what are you Fells doing Mr well Donald told you if we couldn't reach a deal we were going to put you into bankruptcy so he said well let me talk with my advisor so he talked a while came back and we we worked it out we made a little concession he made a little so we go over to the Marriott Marquee and it's naturally mobbed with press I'm pretty sure Yahoo was there maybe maybe yahoo wasn't even around in those days anyhow so we have the press conference turns out to be a good thing we made a deal so I get back in the limit to go home and I'm now worn out cuz there's a lot of nervous energy to use up in one day and the phone rangs in the car it's your mother and she said it just about in those terms and I said oh hi Mom how are you and she said no I'm not good have you lost all your self-respect I said I don't know what you're talking about what do you mean she said well I've been playing marang with my friends and we've all concluded that after all those mean things that Trump said about you you should not have made a deal with him so I said oh Mom that's what I was hired to do yeah and she said well maybe so but if you had only been a lawyer like I always wanted you to be and like your father was then you wouldn't have to hang around with people like this and she hung up on me that is that is an awesome that's an awesome story but it sets the tone or I set I think sets the stage it was important for me to do that cuz I want to give people insight to uh m Mr Ross's career and life before getting inside that that Trump White House I always i f all you work on tows um very very very closely do you think in a second Trump White House he is serious about a universal tariff 60% tariffs on China like I mean a lot of economists say this would be inflationary would hurt the economy how do you see it well I think he's quite serious just as he was in the first term about lowering our trade deficit particularly with China between trade deficit and foreign direct investment1 trillion dollar have gone into China since the WTO think about what a different place us and Europe would be if we still had that 10 trillion instead of it going into China so he blames China and not just China there are plenty of other countries that take advantage of us so he's deadly serious about lowering the trade deficit getting rid of the inequalities getting rid of the violation of intellectual property rights whether that will come out as a big blanket tariff or something else that's a different story um but I think people have to understand he speaks sometimes in his sort of metaphor and that's a very catchy way to make clear to the public he's going to fix the deficit balance of payments problems when you hear um his Challenger uh vice president kamla Harris talk about taxing unrealized capital gains how do you feel about that well I frankly I think it's a ridiculous proposal think about it say you own a stock say you happen to be very lucky and you've been owning Nvidia well until you realize on that gain it's only paper and stocks like Nvidia are very volatile anyway it could just as well go down 20% is up so how does this work if you tax me on it the year when it went up now do I get a refund the year when it goes down or how does it work it's a very hard thing even to imagine how it could be implemented let alone is there any sanity to it take your house most people who've owned their home for quite a few years have an unrealized gain well should you be penalized by paying a tax on the fact that your house has gone up in value it makes no sense and it could force people to sell the house so I I think it's totally nonsense sensical and what it's really saying is I just don't like people who have assets I don't like people who made capital gains and I'm going to punish them are you surprised that the the race is as close as it is no I think it was natural that camela Harris would get a bump remember the left-wing press was very and the party was very eager to get Biden out and get another candidate so once they destroyed Biden and got him out now camela Harris was the obvious candidate they had to build her up and she really isn't that well known and frankly in the Democratic primary when she ran last time she never even got to 6% of the Democrats let alone the overall population she was the first one to drop out of the primary so they have a big rebuilding job to do and they're working very hard at it trying to build her up pretending she was never the bank the Zar for the border which months before they had all applauded her for becoming the zor so there was a huge wave of PR so that gave one bump and then the second when you have your party's convention even though this one was a pretty unruly one in Chicago when you have your convention and you get the nominee you normally get a bump so I think it's not surprising she got bumped question is how durable will it be and how will the debate play out how will the exchange of ideas play out so I think it's early days yet may seem like a short time under 100 days till election but in presidential politics 100 days is a lifetime do you think you mentioned in the book that it was um that you survived four years uh in the white house uh it was a tumultuous time do you think four more years under another Trump Administration would be the same more tumultuous a little less tumultuous no I think it would be much calmer the reason there was so much tumult in the first term was Trump didn't have that many sort of senior level supporters when he ran most of Wall Street was opposed to him most of the corporate Community was opposed to him and he hadn't built a Cadre of people from prior campaigns because he didn't have prior campaigns so he had to rely on recommendations and a lot of the people he brought in early on weren't weren't really trumpers and they didn't really even understand what he was about either as a person or in terms of his ideology so that contributed to the turmoil and some of them quite frankly were actively anti-trump that was why we not only had a lot of turmoil because once he figured out these people were not on board had to get rid of them it was not only turmoil it's why we had so many leaks because people were using leaks to try to change his policy now he's been around a lot longer he knows how Wall Street works well but he also has learned how Washington works so he knows what levers to push how to push them and therefore I think it will be much smoother and much more effective and you're supporting him is it fair to say yes I am supporting okay sure we'll uh we'll leave it there I I really I encourage everyone to go out and get this book and it really is a a a book talking about success uh how to achieve success and ultimately how to get ahead amongst many other things risks and returns creating success in business and life uh former US Commerce Secretary uh Mr wil bar Ross Mr Ross thank you for joining us we appreciate it well thank you for having me on good interview very kind of you thank you so much all right that's it for the latest episode of opening bid [Music]