President-elect Ronald Reagan, should consider talking to the Japanese in an effort to solve the conflict over rising sales of Japanese autos in the United States, Commerce Secretary-designate Malcolm Baldrige said during his Senate confirmation hearing yesterday.

Baldrige's statement was the first public prononcement on the Japanese auto problem by a member of the Reagan team, although Baldrige added that the president-elect has yet to reach a decision on the issue.

Baldrige, whose confirmation is expected to glide through the Senate before Inauguration Day, said he expects the economy to sink rather than "move sideways" during the first quarter of this year. He also said he favors deregulation of some industries, possibly the burgeoning telecommunications field.

In the trade area, Baldrige said all trade functions should be under one roof rather than scattered throughout the government. He did not comment, however, on specific proposals to abolish the office of the U.S. Special Trade Representative.

"I feel trade is separate out too far now," Baldrige said. "It's important to get trade in one place now."

Baldrige said the new administration will work with Congress to determine how trade matters should be handled.

The 58-year-old chairman of Scovill Inc., who once was a professional calf-roper, received bipartisan blessings from members of the Senate Commerce Committee who warmly questioned him for less than two hours yesterday. Connecticut congressmen testifying on his behalf referred to Baldrige as "Mac" and described him as a financial and social activist in the Waterbury, Conn. area.

The hearing was used by some members of the committee to attack the Japanese for many of the U.S. auto industry's financial troubles. Baldrige said the incoming administration had "no definite positions" on import relief for the steel or auto industries.

"There's no question about the importance of the auto industry," Baldrige said. "It's one of the very largest along with housing and agriculture." The problems of the auto industry is "one of the reasons our economy is not going to go sideways in the first quarter; it's going to go down."

Scovill is the manufacturer of Schrader Automotive products which has been hurt, in part, by declining car production and sales.

Inflation and overregulation are hurting the auto industry at a time "when the Japanese have just about reached their peak," Baldrige said. He added that the president-elect hasn't made any specific recommendations, "But I recommend that the president talk to the Japanese and see if we can't work out something so the industry can get back on its feet."

Sen. J. James Exon (D-Neb.) said the free trade with the Japanese should be "a two-way street."

On deregulation, Baldrige said that small businesses are less able to cope with excessive government regulations than large businesses, but he said they shouldn't be given preferetial treatment.

Baldrige said he soon hopes to have "many specifics" on what he thinks shold be deregulated. "Today, I'll just mention the fact we're overregulated everywhere. We should be talking about industry-by-industry deregulation."

Baldrige also was asked about enforcing laws against companies cooperating with the Arab boycott against Israel, rejuvenating the U.S. Merchant Marine, increasing exports by American firms and the extension by President Carter of the grain embargo against the Soviets. In many cases, such as the grain embargo question, Baldrige said he had no answers yet.