CNBC Transcript: U.S. Commerce Secretary Wilbur Ross on CNBC's “Squawk Box” Today

Following is the unofficial transcript of an EXCLUSIVE CNBC interview with U.S. Commerce Secretary Wilbur Ross on CNBC's "Squawk Box" (M-F 6AM - 9AM) today, Thursday, June 7th. Watch video from the interview on CNBC.com here!

JOE KERNEN: THANKS, ANDREW. IF YOU CHECK OUT B1 - CHECK OUT "THE WALL STREET JOURNAL" BIG STORY TODAY. CHINESE TELECOMMUNICATIONS FROM ZTE NEARING A DEAL REPORTEDLY WITH THE U.S. GOVERNMENT HOW TO SAVE ITS BUSINESS. AND JOINING US NOW FOR A CNBC EXCLUSIVE INTERVIEW, COMMERCE SECRETARY WILBUR ROSS. MR. SECRETARY, AS ALWAYS IT'S GREAT TO SEE YOU. WHERE DOES THIS STAND NOW? "THE JOURNAL" SAYS WE ARE CLOSE TO A DEAL.

SECRETARY WILBUR ROSS: WELL, WE ARE MORE THAN CLOSE AT ABOUT 6:00 A.M. THIS MORNING, WE EXECUTED DEFINITIVE AGREEMENT WITH ZTE AND THAT BRINGS, THAT BRINGS - THAT BRINGS TO A CONCLUSION THIS PHASE OF THE DEVELOPING WITH THEM.

KERNEN: REALLY? OKAY. SO THAT - YOU'RE TELLING US THAT RIGHT NOW?

BECKY QUICK: THIS IS BREAKING.

KERNEN: YEAH. SO, AT 6AM THIS MORNING, THIS IS NO LONGER NEARING A DEAL, THIS IS A DEAL HAS BEEN DONE AND THE LETTER, THE Ts ARE CROSSED, THE Is ARE DOTTED. EVERYTHING IS FINISHED.

ROSS: YEP. ALL 23 PAGES OF THEM.

KERNEN: 23 PAGES. OKAY. SO WERE THE PROVISIONS AND THE PARAMETERS THAT HAVE BEEN OUT THERE, IS IT BASICALLY, CAN YOU SUMMARIZE EXACTLY WHAT'S IN THE DEAL AND HOW IT WORKS?

ROSS: SURE. AS YOU KNOW, THIS IS A TRADE ENFORCEMENT PROCEEDING. ZTE ORIGINALLY HAD BEEN VIOLATING THE U.S. SANCTIONS BOTH AGAINST NORTH KOREA AND AGAINST IRAN. SO IN MARCH OF 2017, WE REACHED A SETTLEMENT WITH THEM AND HAD IT APPROVED BY THE COURT. SUBSEQUENTLY, WE LEARNED NOT THAT THEY HAD DONE MORE VIOLATIONS OF SANCTIONS, BUT, INSTEAD, HAD LIED TO US DURING THE SETTLEMENT NEGOTIATIONS AND AFTER THEM. SO WE THEN TRIGGERED ONE OF THE PROVISIONS THAT WE HAD IN THE AGREEMENT, WHICH WAS, WE COULD EITHER TAKE $300 MILLION THAT HAD BEEN PUT ASIDE OR WE COULD, IN EFFECT, SHUT THEM DOWN BY DENYING THEM ACCESS TO THE U.S. TECHNOLOGIES THAT THEY NEEDED. WE OPTED INITIALLY TO DO THAT. WHAT THIS NEW DEAL DOES IS SOMETHING I THINK EVEN MORE EFFECTIVE. IT IMPOSES THE MOST STRICT COMPLIANCE THAT WE'VE EVER HAD ON ANY COMPANY, AMERICAN OR FOREIGN. WE ARE LITERALLY EMBEDDING A COMPLIANCE DEPARTMENT OF OUR CHOOSING INTO THE COMPANY TO MONITOR IT GOING FORWARD. THEY WILL PAY FOR THOSE PEOPLE, BUT THE PEOPLE WILL REPORT TO THE NEW CHAIRMAN, BECAUSE WE ARE ALSO HAVING THEM REPLACE THE ENTIRE MANAGEMENT AND THE ENTIRE BOARD. THEY'LL REPORT TO THE CHAIRMAN AND TO THE COMMERCE DEPARTMENT DIS DIVISION JOINTLY. AND HERE'S WHAT THIS ACCOMPLISHES. ENFORCEMENT IS ABOUT TWO THINGS: PUNISHING PEOPLE FOR BAD ACTS IN THE PAST AND GIVING THEM AND OTHER PARTIES A DISINCENTIVE TO GO FORWARD WITH BAD ACTS IN THE FUTURE. WE THINK THIS SETTLEMENT, WHICH BROUGHT THE COMPANY -- A $17 BILLION COMPANY TO ITS KNEES MORE OR LESS PUT THEM OUT OF BUSINESS, NOW, THEY'RE ACCEPTING HAVING THIS COMPLIANCE TEAM IN, WHOLE NEW MANAGEMENT, WHOLE NEW BOARD, SHOULD SERVE AS A VERY STRONG DETERRENT, NOT ONLY FOR THEM, BUT FOR OTHER POTENTIAL BAD ACTORS. AND SO THAT'S WHY I'M VERY, VERY HAPPY WITH THIS ARRANGEMENT. NOW, IF THEY DO VIOLATE IT AGAIN, IN ADDITION TO THE BILLION DOLLARS THEY'RE PAYING US RIGHT UP FRONT, WE HAD THEM PUT $400 MILLION IN ESCROW. SO THE TOTAL DEAL IS A BILLION 400 MILLION. THAT MONEY WILL BE FORFEITED IF THEY VIOLATE ANYTHING, WHETHER IT'S LYING OR SANCTIONS OR ANYTHING ELSE AND WE STILL RETAIN THE POWER TO SHUT THEM DOWN AGAIN. SO THIS IS A PRETTY STRICT SETTLEMENT. THE STRICTEST AND LARGEST FINE THAT HAS EVER BEEN BROUGHT BY THE COMMERCE DEPARTMENT AGAINST ANY VIOLATOR OF EXPORT CONTROL. SO IT'S BEEN A LONG ROAD GETTING HERE, BUT I'M QUITE PLEASED WITH THE END RESULT.

JOE KERNEN: LARRY BOSSIDY.

LARRY BOSSIDY: WILBUR ROSS, LARRY BOSSIDY.

ROSS: HEY, LARRY. HOW ARE YOU?

BOSSIDY: GOOD. SHOULD WE LOOK UPON THIS AS A SEPARATE DEAL OR SHOULD WE LOOK UPON THIS AS A PIECE OF AN OVERALL SETTLEMENT COMING DOWN THE ROAD WITH CHINA?

ROSS: NO, THIS IS AN ENFORCEMENT ACTION. IT HAPPENS THAT I'VE BEEN INVOLVED WITH THE OTHER NEGOTIATIONS WITH CHINA. BUT THAT'S QUITE SEPARATE AND APART FROM ENFORCEMENT. EVERY DAY, EVERY WEEK, PRACTICALLY, WE'RE BRINGING SOME SORT OF AN ENFORCEMENT ACTION AGAINST CHINA OR SOME OTHER COUNTRY AND THAT HAS NOTHING TO DO WITH BIG NEGOTIATIONS SUCH AS THE ONES WE' VE BEEN EMBARKED UPON.

ANDREW ROSS SORKIN: MR. SECRETARY, JUST TO CLARIFY ON THAT PARTICULAR POINT, THOUGH, THE PRESIDENT INSTRUCTED YOUR DEPARTMENT TO CONSIDER REVISING YOUR VIEW OF WHAT YOU HAD DONE WITH ZTE ORIGINALLY AND MOST OF US FROM THE OUTSIDE AT LEAST HAVE LOOKED AT THIS AS A CHESS PIECE IN THIS LARGER NEGOTIATION. HOW CAN IT NOT BE?

ROSS: WELL, I DON'T KNOW WHAT THE PRESIDENT HAD IN MIND. ALL I KNOW IS WHAT WE HAD IN MIND FROM AN ENFORCEMENT POINT OF VIEW IS CAN WE PROVIDE A REALLY GOOD SOLUTION AND ONE THAT ALSO DOESN'T HAVE ADVERSE SIDE EFFECTS. THIS COMPANY DID SELL 15 MILLION CELL PHONES, VERY LOW END ONES TO AMERICANS LAST YEAR AND SO THAT'S ONE CONSIDERATION THAT WE HAD. IT ALSO BUYS A LOT OF COMPONENTS FROM QUALCOMM AND FROM OTHER AMERICAN MANUFACTURERS, SO THAT WAS ANOTHER CONSIDERATION THAT WE HAD IN MIND. BUT THE MAIN THING IS WHAT I SAID IN THE BEGINNING: PURPOSE OF ENFORCEMENT, PUNISH BAD ACTORS AND BY GETTING RID OF THE WHOLE MANAGEMENT AND BOARD AND FINING THEM ANOTHER BECOME 4 ON TOP OF THE BILLION THAT WE GOT FROM THEM A YEAR AGO AND YET KEEPING THE ABILITY TO PUT THEM OUT OF BUSINESS, I THINK WILL SERVE AS A VERY, VERY POWERFUL DETERENT TO OTHER BAD ACTORS.

SORKIN: HOW DO YOU THINK THIS IS GOING TO CHANGE THE DYNAMIC, POSITIVELY OR NEGATIVELY WITH YOUR TARIFF DISCUSSION WITH THE CHINESE?

ROSS: I DON'T THINK IT WILL HAVE ANY NECESSARY IMPACT ON THAT. THEY RECOGNIZE THAT THESE WERE BAD PEOPLE. IT WOULDN'T BE THAT SURPRISING IF THE CHINESE TOOK SOME SORT OF A FURTHER ACTION ON THEIR OWN. THIS IS A WORLD CLASS EMBARRASSMENT FOR THAT GOVERNMENT. ZTE IS A $17 BILLION COMPANY OUT OF $30 BILLION MARKET CAP AND THEY BLEW IT OVER SOME VIOLATIONS OF U.S. LAWS. I THINK THIS IS A VERY, VERY WELL PUBLICIZED VERY IMPORTANT MESSAGE TO OTHER PARTIES, DON'T FOOL AROUND WITH OUR EXPORT CONTROLS OR YOU ARE REALLY GOING TO GET HURT.

KERNEN: IT JUST SEEMS, WILBUR, THAT I MEAN THE NOTION THAT WE'RE THE U.S. GOVERNMENT IS GOING TO PICK THE PEOPLE ON ZTE'S COMPLIANCE TEAM, IT TEAMS SEEMS LIKE THERE ARE SO MANY CONCESSIONS FROM CHINA, IT JUST SEEMS ALMOST UNCHARACTERISTIC AND HOW MANY OTHER VIOLATIONS ARE WE TALKING ABOUT THAT HAPPEN ON A DAILY BASIS OF INTELLECTUAL PROPERTY OR YOU KNOW TAKE YOUR PICK ON WHY WE'RE EVEN IN THIS BREW HA HA WITH CHINA, BUT IT JUST ALMOST SEEMS UNCHARACTERISTIC THAT THE CHINESE, WHICH ARE, YOU KNOW, YOU NEED TO PART THEIR WITH THEM. IT'S SO DIFFICULT TO DO BUSINESS THERE, IT'S JUST SEEMS TOO GOOD TO BE TRUE ALMOST, THAT THEY'RE ALLOWING PEOPLE THAT WE PICK THAT THE U.S. PICKS TO COME IN TO RUN THINGS.

ROSS: WELL, I THINK THERE'S A REAL REASON FOR IT. HAD PRIOR ADMINISTRATIONS HAVE BEEN REAL PATSYS FOR THE CHINESE THAN FOR OTHER COUNTRIES, THEY'VE NEVER PUSHED BACK. TRUMP ADMINISTRATION FOR THE FIRST TIME IS PUSHING BACK ON ALL FRONTS: ON INTELLECTUAL PROPERTY RIGHTS, ON TECHNOLOGY TRANSFERS, ON SUBSIDIZATION OF OVER CAPACITY, DUMPING, ALL KIND OF RULES THAT HAVE BEEN NOT OBEYED. SO I THINK THE CHINESE ARE WELL AWARE THERE'S A NEW MARSHALL IN TOWN AND IT'S CALLED DONALD J. TRUMP. AND HE'S A VERY, VERY GOOD SHOT.

QUICK: SECRETARY ROSS, LET ME ASK YOU ABOUT SANCTIONS AND SANCTIONS VIOLATIONS IN GENERAL, BECAUSE THAT'S A BROADER ISSUE THIS IS A TOUCHSTONE FOR.

ROSS: SURE.

QUICK: THIS WEEK, SOME EU OFFICIALS WROTE TO TRUMP ADMINISTRATION OFFICIALS AND ASKED -- ASKED FOR EXEMPTIONS FOR EUROPEAN COMPANIES FROM THE SANCTIONS THAT ARE GOING TO BE REIMPOSED ON IRAN. DO YOU THINK THAT IS LIKELY TO PASS GIVEN THAT THIS MESSAGE YOU'RE SENDING OUT TODAY?

ROSS: I REALLY DON'T THINK SO. SECRETARY MNUCHIN HAS GONE TO GREAT LENGTHS TO TRY TO MAKE SURE THESE SANCTIONS WORK AND THAT THEY'RE EFFECTIVE AND THAT THEY'RE REALLY BITING. AND WE'RE ALREADY SEEING IT MODIFY THE BEHAVIOR OF THE IRANIANS. I BELIEVE IT'S ONE OF THE MAIN REASONS WHY NORTH KOREA SEEMS POTENTIALLY TO BE COMING TO THE TABLE. SANCTIONS ARE IMPORTANT. ECONOMIC WARFARE IS IMPORTANT. I WOULD BE VERY, VERY SURPRISED IF OUR GOVERNMENT WOULD GIVE ANY MEANINGFUL EXCEPTION OTHER THAN MAYBE FOR HUMANITARIAN PURPOSES OR SOME VERY SPECIFIC, VERY SMALL PURPOSE. BUT TO JUST GIVE PEOPLE A FREE PASS TO DO BUSINESS WITH THESE FELLOWS IN THE FACE OF OUR SANCTIONS, NO, I DON'T SEE THAT FORTHCOMING.

SORKIN: MR. SECRETARY, WANTED TO ALSO ASK, I DON'T KNOW IF YOU SAW THE NEWS A DISCLOSURE IN "THE NEW YORK TIMES" EARLIER THIS WEEK ABOUT FACEBOOK AND A DATA PARTNERSHIP WITH FOUR CHINESE COMPANIES, INCLUDING HUAWEI, WHICH THE U.S. HAS HAD A NUMBER OF SECURITY CONCERNS ABOUT THAT COMPANY. U.S. -- NATIONAL SECURITY CONCERNS.

ROSS: RIGHT.

SORKIN: IS YOUR DEPARTMENT LOOKING INTO THAT?

ROSS: WELL, FACEBOOK IS NOT REALLY A PART OF OUR DOMAIN. THE REASON WE GOT INVOLVED WITH THE ZTE IS THE DEPARTMENT OF COMMERCE, BUREAU OF INDUSTRY AND SECURITY ADMINISTERS AND ENFORCES THE EXPORT CONTROLS. SO UNLESS EXPORT CONTROLS OF HIGH-TECH MILITARILY SIGNIFICANT MATERIALS WERE INVOLVED IN THE FACEBOOK THING, I DON'T THINK THAT WE WOULD REALLY HAVE A JURISDICTION FOR GOING IN THERE. THERE MAY BE SOME OTHER ENTITY THAT WOULD, SO WE WILL LOOK AT IT AND WE WILL SEE IF THERE IS ANY VIOLATION OF EXPORT CONTROLS. AND IF THERE IS, I PROMISE YOU, WE'LL BE ON THEM.

SORKIN: DO YOU - DO YOU HAVE HAVE CONCERNS ABOUT HUAWEI? AT&T ANNOUNCED THEY WILL NOT BE DISTRIBUTING THEIR PHONES HERE IN THE UNITED STATES. THEIR NEWEST PHONES.

ROSS: YES, I'VE SEEN THAT. I'VE HEARD A LOT OF THE RUMORS ABOUT HUAWEI. AS OF THE MOMENT, I DON'T BELIEVE THAT OUR DEPARTMENT HAS FOUND ANY VIOLATIONS OF HUAWEI.

KERNEN: HEY, WILBUR, IT'S NICE - I GUESS - SOME GUYS -- TO GO AGAINST THE CROWD, AT TIMES. AND IN TERMS OF INVOKING CONCERNS FOR CLOSE ALLIES: CANADA, MEXICO, OR WHATEVER, IT'S LIKE YOU'RE - THERE'S LIKE YOU AND THE PRESIDENT AND THEN THERE IS EVERYBODY ELSE, THAT THIS MIGHT NOT BE A GREAT IDEA. AND YOU CAN YOU UNDERSTAND IT - THAT WE REALLY DON'T THINK OF CANADA AS A SECURITY RISK OR MEXICO, NECESSARILY AS A SECURITY RISK SO IT ALMOST LOOKS LIKE YOU'RE, YOU KNOW, SORT OF USING A LOOPHOLE TO EFFECT THIS AND IT'S GOING TO COME BACK TO HAUNT US. 'CAUSE IT'S LIKE, IF WE'RE GOING TO DO THIS IN THIS SORT OF, I DON'T KNOW, KIND OF A YOU KNOW NOT A TOTALLY ABOVE BOARD WAY, THAT THEY'RE GONNA COME BACK AND SAY, "LOOK, YOU DID IT TO US, WE'RE GONNA DO IT TO YOU." AND IT SETS A BAD PRECEDENT. IS THERE ANYTHING DO TO THAT?

ROSS: NO. AND I'D LIKE TO ANSWER THE TWO PARTS OF THAT QUESTION.

KERNEN: OKAY.

ROSS: FIRST OF ALL, THEY HAVEN'T HAD - THEY HAVEN'T EVEN BOTHERED TO USE ANY EXCUSE WHY THEY HAVE ASYMMETRICAL TARIFFS AGAINST US, WHY THEY HAVE NON TARIFF TRADE BARRIERS THAT ARE MONUMENTAL AGAINST US. THEY DON'T EVEN BOTHER TRYING TO INVENT AN EXCUSE. SO THE NOTION THAT NOW INVOKING NATIONAL SECURITY BY US WILL SOMEHOW FREE THEM UP OF THE SHACK HIM IS RUBISH. THEY'VE BEEN VERY, VERY AGGRESSIVE IN THEIR BEHAVIOR BEFORE. SECOND, NATIONAL DEFENSE IS A DEFINED TERM IN SECTION 232 OF THE 1962 TRADE EXPANSION ACT. THAT'S THE LEGISLATION BASED ON WHICH WE BROUGHT THE STEEL AND ALLUMINUM TARIFF. THAT DEFINES IT CORRECTLY AND BROADLY. NAMELY, IT RECOGNIZES THAT YOU CANNOT HAVE MILITARY SECURITY IF YOU DON'T HAVE ECONOMIC STRENGTH AND ECONOMIC SECURITY. SO IT SPECIFICALLY INVOKES THINGS LIKE UNEMPLOYMENT, HEALTH OF AN INDUSTRY, UNFAIR FOREIGN COMPETITION, AS A PART OF THE DEFINITION. I DIDN'T WRITE THE LEGISLATION, SO IT ISN'T MY JOB TO TELL YOU WAS THAT A PROPER USE OF THE DEFINITION. I THINK IT WAS BECAUSE THE TRUTH IS, YOU MUST BE STRONG ECONOMICALLY TO BE STRONG MILITARILY. NOW, AS TO THE PERSONALIZATION THAT TRUDEAU IN CANADA AND OTHERS TIED TO PUT ON IT, THEY'RE JUST HIDING BEHIND THAT. THEY KNOW FULL WELL WE THAT DON'T REGARD THEM INDIVIDUALLY AS NATIONAL SECURITY RISKS. THAT'S NOT WHAT THE ACT IS ABOUT. THIS WAS A COLLECTIVE ACTION TAKEN TO DEAL WITH A GLOBAL PROBLEM, GLOBAL OVER SUPPLY AND OVER PRODUCTION OF STEEL, GLOBAL OVER SUPPLY AND GLOBAL OVER PRODUCTION OF ALLUMINUM. WE HAD TO DO IT ON A UNIVERSAL BASIS IN ORDER TO MAKE IT WORK. AND WHAT'S INTERESTING TO ME IS, THE SAME PEOPLE WHO ARE COMPLAINING THE LOUDEST ABOUT IT ARE FINALLY STARTING TO DO WHAT WE HAVE BEEN WANTING THEM TO DO FOR QUITE A WHILE. NAMELY, PROTECT THEIR OWN BORDERS FROM THESE VERY SAME PROBLEMS. SUDDENLY EUROPE IN THE MONTH OF JUNE IS PUTTING IN ALL SORTS OF SAFE GUARD ACTIONS. WELL, WHERE WERE THEY A YEAR AGO? WHERE WERE THEY TWO YEARS AGO? WE'VE BEEN FIGHT THAT FIGHT EVER SINCE THE TRUMP ADMINISTRATION CAME IN. AND WE HAVE NOW ONE-FOURTH OF THE ALL THE TRADE ACTIONS THAT THE U.S. HAS TOTAL FROM EVER HAVE BEEN BROUGHT UNDER THIS ADMINISTRATION AND THAT'S BECAUSE THERE IS SO MANY VIOLATIONS. THE 232 WAS SIMPLY A MEANS OF GETTING TO A SOLUTION TO A GLOBAL PROBLEM ON A GLOBAL BASIS. AND, GUESS WHAT? IT'S WORKING. U.S. STEEL TWO NIGHTS AGO OPENED ANOTHER FACILITY. HASN'T BEEN GOING FOR YEARS AND YEARS AND YEARS. A MILLION 200,000 TONS. A FEW WEEKS BEFORE THEY DID ANOTHER MILLION-AND-A-HALF TON. THERE ARE PIPE MILLS, 20 DIFFERENT PIPE MILLS BEING EXPANDED AS WE SIT HERE. THIS IS CHANGING THE ROAD MAP. IT'S A VERY, VERY IMPORTANT THING. YOU CANNOT HAVE A COUNTRY IF YOU DON'T HAVE STEEL INDUSTRY AND YOU DON'T HAVE AN ALLUMINUM INDUSTRY. AND IF YOU DON'T DRAW THE LINE SOMEWHERE, IT WILL BE THE NEXT INDUSTRY AND THE NEXT. SO THE SAME NAYSAYERS WHO ARE COMPLAINING ABOUT STEEL AND ALLUMINUM, THEY ALSO SAID, OH, IF YOU PUT TARIFFS ON SOLAR PANELS, IT WILL BE THE END OF SOLAR ELECTRICITY. WELL WHAT REALLY HAPPENED? MORE FACTORIES HAVE OPENED HERE MAKING SOLAR PANELS. BUT WHEN WE PUT THE TARIFFS IN WASHING MACHINES THEY SAID, "OH MY GOD, YOU'RE GONNA KILL THE WORLD." GUESS WHAT'S HAPPENED? LG AND SAMSUNG, TWO OF THE MAIN FOREIGN COMPETITORS, ARE RAPIDLY EXPANDING FACILITIES HERE IN THE U.S. AND ARE NOW FOR THE FIRST TIME REALLY SEEKING OUT PARTS SUPPLIERS AND COMPONENT MANUFACTURERS HERE IN THE U.S.

KERNEN: HEY, WILBUR. JUST BACK UP TO THE ZTE DEAL AGAIN, WE'RE GETTING SOME QUESTIONS. WHO PICKS THE CHAIRMAN OF THE COMPANY? DOES THE U.S. PICK THE CHAIRMAN? WILL IT BE AN AMERICAN? HOW'S THAT GONNA THAT WORK FOR ZTE?

ROSS: NO, THIS WAS A PUBLICLY QUOTED COMPANY. IT HAD HAD A $30 BILLION MARKET CAP BEFORE WE TOOK OUR ACTION. THE SHAREHOLDERS AND -- WILL TAKE CARE OF THE NEW BOARD AND THE NEW MANAGEMENT. THE PART THAT WE WILL TAKE CARE OF IS THE KEY PART. IT'S NOT OUR JOB TO MAKE CELL PHONES. IT IS OUR JOB TO MAKE SURE THAT THEY DON'T VIOLATE SANCTIONS. AND THAT'S WHY WE WILL BE PUTTING OUR OWN COMPLIANCE REGIME IN AND OUR OWN COMPLIANCE PEOPLE.

SORKIN: WILBUR WILL THOSE BE AMERICANS? WILL THAT BE AN OUTSIDE COMPANY OR CONSULTING FIRM THAT YOU WOULD HIRE TO OVERSEE THIS?

ROSS: NO, IT WILL BE INDIVIDUALS. IT WILL BE INDIVIDUALS WHO ARE FLUENT IN CHINESE, BECAUSE THIS IS GOING TO AFFECT THE TOTAL COMPANY, NOT JUST THE AMERICAN PART OF THE COMPANY. AND THAT'S THE OTHER UNIQUE FEATURE. THIS IS THE FIRST TIME THAT I'M AWARE THAT A MAJOR FOREIGN COMPANY HAS BEEN BROUGHT INTO STRICT COMPLIANCE WITH U.S. EXPORT CONTROL RULES.

KERNEN: YES. DEFINITELY GOOD THAT THEY'LL BE FLUENT IN MANDARIN OR --. WE WERE ACTUALLY - WE WERE TALKING ABOUT THAT EARLIER ACTUALLY IN SORT OF - THAT, YOU DEFINITELY WANT TO MAKE SURE THEY'RE IN THE ROOM AND THEY KNOW WHAT'S GOING ON, OTHERWISE, YEAH. HEY, WILBUR, YOU HAVE BEEN A REPUBLICAN YOUR WHOLE LIFE, I THINK, HAVEN'T YOU?

ROSS: NO, I DON'T KNOW THAT THAT'S TRUE.

KERNEN: ALRIGHT BUT -- YOU SEE THAT THERE IS A LOT OF WELL-MEANING CONSERVATIVE REPUBLICANS THAT THINK THAT THERE'S GONNA BE MORE JOB LOSSES THAT RESULT FROM THIS FEW THAT WE SAVE GIVEN THIS, SOME OF THE TARIFFS, THAT WE'RE KIND OF CUTTING OFF OUR NOSE DESPITE OUR FACE? I MEAN - WE SEE MORE AND MORE OF THAT EVERY DAY IN THE RHETORIC. I KNOW YOU READ IT. DO YOU SEE YOURSELF AND THE PRESIDENT, IF IT GETS TO THAT POINT WHERE IT'S ACTUALLY COUNTERPRODUCTIVE --

ROSS: WELL BUT IT'S NOT -

KERNEN: IS THIS A BARGAINING - IS THERE A BARGAINING LEVEL OF THE BARGAINING HERE WHERE WE'D BE WILLING TO BACK OFF AND GO BACK AND PULL SOME OF IT BACK IN? PULL THE --

ROSS: WELL, FIRST OF ALL, JOE, YOU'RE ASSUMING THAT THEY'RE RIGHT IN THEIR PREMISE. YOU LOOK AT THE RECENT UNEMPLOYMENT FIGURES, I DON'T SEE THAT THERE'S BEEN A NEGATIVE SQUE. IT LOOKS TO ME LIKE UNEMPLOYMENT FIGURES, EMPLOYMENT IS AT ALL TIME HIGHS. WE NOW HAVE 6.6 MILLION JOB OPTION.

KERNEN: WE HAVEN'T PUT THE TARIFFS IN YET, WILBUR. THERE JUST--

ROSS: THAT'S NOT TRUE. THAT'S NOT TRUE.

KERNEN: OKAY BUT -

ROSS: -- THEY WENT IN IN MARCH.

KERNEN: SOME OF THEM.

ROSS: THEY WENT INTO EFFECT IN MARCH.

KERNEN: RIGHT. SOME OF THEM.

ROSS: RIGHT. AND MEANWHILE, WHAT YOU HAVE SEEN ARE FACTORIES OPENING. ONCE IN A WHILE THERE IS SOME ISOLATED CASE OF SOME SMALL COMPANY CLAIMING TO BE HURT BY THIS EVENT. BUT REMEMBER, I CAME ON THIS VERY SHOW AND DEMONSTRATED WITH THE CAMPBELL SOUP CAN HOW TRIVIAL AN IMPACT THE STEEL TARIFFS AND ALLUMINUM TARIFFS ACTUALLY HAVE. REMEMBER, IT'S A FRACTION OF A PENNY ON A CAN OF CAMPBELL'S SOUP. IT'S A FRACTION OF A PENNY ON A CAN OF COCA-COLA. A FRACTION OF A PENNY ON A CAN OF BUDWEISER. IT'S UNDER 1% OF THE COST OF A CAR. NOW DO REALLY THINK THOSE TRIVIAL IMPACTS DOWN STREAM ARE GOING TO CAUSE LAYOFFS? I THINK IT'S SILLY.

KERNEN: IS THERE ANY WAY TO -

QUICK: WE'RE LOOKING AT RV SHARES DOWN IN SOME CASES, SEVEN, EIGHT-

KERNEN: THAT MAY BE GAS PRICES -- I THINK THAT'S GAS PRICES, THOUGH. I DON'T KNOW WHAT THAT'S FROM.

QUICK: PART OF THAT'S FROM -- IN CANADA, TOO. SOME OF THEM COME FROM CANADA AND SOME OF THEM ARE METAL IMPORTS, TOO.

BOSSIDY: IF YOU HAVE SO LITTLE IMPACT, WHY DO WE DO IT?

ROSS: NO, IT'S THAT IT DIDN'T HAVE MUCH IMPACT ON THE DOWNSTREAM INDUSTRIES. THE ARGUMENT THE NAYSAYERS HAD WAS THEY SAID, "OH. OH. THERE ARE FAR MORE PEOPLE IN THE INDUSTRIES THAT BUY STEEL THAN THERE ARE IN THE INDUSTRY THAT MAKES STEEL." AND THAT'S TRUE. BUT IT'S NOT RELEVANT WHEN YOU ARE TALKING ABOUT A FRACTION OF 1% OF THEIR COSTS. VERY FEW COMPANIES, LARRY, AS YOU KNOW, CAN GET THE COST OF AN INDIVIDUAL PRODUCT RIGHT TO WITHIN A FRACTION OF THE PENNY.

KERNEN: WILBUR, DO YOU THINK THERE IS ANYTHING TO IT THAT THIS IS THE TIME TO DO IT IF YOU CAN PLAY -- IF YOU ARE ABOVE 3% ON GDP AND THAT IS THE TIME TO TRY TO TAKE SOME ENFORCEMENT ACTION WHEN THINGS ARE GOING WELL, DO YOU YOU SEE IT AS ANY HEAD WIND AT ALL? AND IF SO, HOW MUCH COULD YOU SEE IT TAKING OFF GDP? BECAUSE I'M SURE IF IT WAS A HALF A POINT OF GDP, YOU WOULDN'T DO IT. SO, OBVIOUSLY, YOU DON'T THINK IT IS. WHAT DO YOU THINK -- HAVE YOU CALCULATED THAT, IN TOTAL, ALL THESE DIFFERENT THINGS?

ROSS: SURE. WELL, IF YOU TAKE THE TOTAL AMOUNT OF THE TARIFFS AND IF YOU ASSUME THAT THAT FULL COST GOT PASSED ON INTO THE ECONOMY, IT'S ABOUT $9 BILLION A YEAR. WE'RE IN AN $18 TRILLION ECONOMY. COMPARE $9 BILLION TO $18 TRILLION, YOU KNOW IT'S A TINY FRACTION OF 1%. IT'S JUST MATH.

KERNEN: OKAY. ALL RIGHT. WILBUR, I JUST -- YOU HAVE A FORECAST FOR TOTAL 2018 GDP, WHAT CAN -- WE'RE RUNNING A LITTLE POOL HERE. WHAT'S YOUR NUMBER?

ROSS: I'M NOT ALLOWED TO BE A BETTING PERSON ANY MORE. BUT I THINK THAT SOMETHING WELL INTO THE 3s SHOULD BE VERY, VERY ACHIEVABLE. YOU PROBABLY SAW THE FEDERAL RESERVE BANK OF ATLANTA--

KERNEN: I DID.

ROSS: -- CAME COME OUT WITH A 4.8 OR SOME SUCH A FORECAST.

KERNEN: YEAH.

ROSS: I THINK THAT'S A LITTLE BIT OF AN OUTLIER. BUT REMEMBER WHAT WE WERE FACED BEFORE THE TRUMP ADMINISTRATION, LARRY SUMMERS AND OTHER BIG DEMOCRATS WERE SAYING ECONOMY CAN NEVER GROW MORE THAN 1.5 OR 2% A YEAR. AND THEY'RE PROBABLY RIGHT UNDER THEIR STYLE OF OPERATING, IT PROBABLY WOULDN'T HAVE. BUT, LOOK WHERE WE ARE, A LOT OF THE MEASURES HAVEN'T TAKEN FULL EFFECT YET. THE TAX BILL, THE REGULATORY REFORM AND A LOT OF THESE TRADE REFORMS REALLY HAVEN'T TAKEN FULL EFFECT. SO I THINK THOSE ARE EXTREMELY IMPORTANT AND MAYBE EVEN MORE IMPORTANT AND I THINK THE BIGGEST THING THAT THE ECONOMISTS MISS IS PSYCHOLOGY.

KERNEN: PSYCHOLOGY, OK.

ROSS: CONSUMER OPTIMISM IS ALL TIME HIGHS. BUSINESS OPTIMISM. SMALL BUSINESS OPTIMISM.

KERNEN: MR. SECRETARY -- THANK YOU. WE APPRECIATE -- WE APPRECIATE THE EXTENDED TIME THAT YOU GAVE US TODAY AND THE NEWS THAT YOU BROKE WITH US ABOUT ZTE - ZTE AGREEMENT. WE APPRECIATE THAT. WE HOPE TO SEE YOU AGAIN SOON. THANKS.

ROSS: THANK YOU JOE.

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