New WH Econ Advisor: 'Pot of Gold' at End of China Negotiations
Former CNBC contributor, Wall Street economist and Reagan administration budget official Larry Kudlow began his new role as President Donald Trump’s chief White House economic adviser this week, and he hit the ground running with a number of media appearances to explain the president’s economic and trade policies that have some investors feeling a bit nervous about a potential trade war with China.
In an interview Wednesday with Fox Business Network host Stuart Varney, Kudlow was quick to insist that there was not, nor would there be, a trade war with China due to the tariffs the president had announced, and the subsequent retaliatory tariffs on American goods by China.
Fears of a trade war had caused the stock market to plummet nearly 500 points at the opening bell on Wednesday — it later recovered those losses and closed up more than 200 points — but Kudlow seemed to quell those fears while simultaneously making clear that Trump was “completely right” to take the actions he had taken.
“So look, I understand the stock market’s anxiety. I get that,” Kudlow said. “But on the other hand, don’t over react. We’ll see how this works out. I think that at the end of this whole process, that at the end of the rainbow, there’s a pot of gold.”
.@larry_kudlow on market reaction to China's tariff announcement: "Don't overreact, we'll see how this works out… At the end of this whole process, the end of the rainbow, there's a pot of gold." pic.twitter.com/Ufgfh1uq0C
— FOX Business (@FoxBusiness) April 5, 2018
“And if you open up that pot, you will see better economic growth, more trading going on, improved wages for both sides,” he added. “Anytime you lower barriers … it’s good for growth. It’s good for American growth and American workers, it’s good for China’s growth, it’s good for the rest of the world’s growth.”
Kudlow admitted, “I’m not a fan of tariffs, I’m a free-trade guy by and large. But I think the president is completely right to take these actions.”
Kudlow also pointed out the tariffs being proposed by Trump are just that — proposals.
“These are just the first proposals,” Kudlow said. “We’re putting it out for comment, it’s going to take a couple months, I doubt if there will be any concrete action for several months, we’ll see how that plays out. Nothing concrete has actually happened, these are proposals
“But the message is clear, China has got to stop these unfair and illegal trading violations. They must. They’ve done it for years,” Kudlow added. “They’re operating outside the (World Trade Organization rules) … Trump’s putting his cards on the table, he’s standing up for this country, but he’s also standing up for better world trade.”
Earlier in the Wednesday interview, Kudlow made it clear that China was to blame for the worries about a potential trade war, and Trump’s actions were merely in response to actions China has taken for many years.
“Trump is really the first president to fight back and to put a shot across the bow, stealing intellectual property rights, technology transfers, high barriers, investment limitations, high tariffs — this stuff really is not just unfair, it’s unlawful,” Kudlow said.
“It’s outside the boundaries of the WTO. Every country in the world knows this. Every analyst knows this is the case,” he added. “Somebody’s got to deal with it. President Trump is going to deal with it.”
“There’s no trade war here,” he added as reassurance. “What you’ve got is the early stages of a process which will include tariffs, comments on the tariffs, then ultimate decisions and negotiations. There’s already back channel talks going on.”
A report from Politico said Kudlow, in his new role as director of the National Economic Council, would essentially serve as a sort of mediator between the global investors in the stock market versus Trump and his more “protectionist” economic advisers like Commerce Secretary Wilbur Ross and trade adviser Peter Navarro.
Judging by the market’s positive reaction following Kudlow’s media appearances, it appears he has already seen some success in explaining that the proposed tariffs are not the be-all and end-all of Trump’s economic policies, but merely a negotiating tool to best utilize America’s vast economic power to forge better trade deals for all parties involved, including China.
Though the situation in the interim could be a bit less than pretty for investors, Americans who believe in free trade, more jobs and ultimately lower prices for consumers should feel a bit of relief that Trump’s tactics are working in the long term toward that very real and attainable goal.
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