Larry Kudlow, Trump economic adviser, comes around on tariffs as a tool

Larry Kudlow calls himself “an old free-trader,” leery of tariffs.

But as the top economic adviser to a president who has wielded tariffs as a weapon – pushing back hard on trade practices around the world, from North America to Europe to China and Japan – Mr. Kudlow has come to appreciate President Donald Trump’s aggressive approach.

“The president’s use of tariffs as a negotiating tool – I think he’s right, I really do,” Mr. Kudlow, assistant to the president and director of the National Economic Council, told reporters Wednesday at a breakfast hosted by The Christian Science Monitor.

“Particularly in the Chinese situation, I think he was right,” Mr. Kudlow added. “He’s the first president – I don’t know, ever? – to be hard-headed with China.”

The Trump adviser listed Chinese practices that have long vexed bilateral relations and business dealings with American companies, including intellectual property theft, forced transfer of technology, and cyber-hacking.  

The Chinese “have for the first time acknowledged that we have a point,” Mr. Kudlow said. Before that they were in “denial.” Now, he says, they are engaging in “good negotiations.”

“I think we’ve all learned something on this,” Mr. Kudlow added.

In the discussion with reporters, Mr. Kudlow also addressed President Trump’s threat to close the US-Mexico border, the independence of the Federal Reserve, the controversy surrounding Mr. Trump’s intention to nominate Stephen Moore to the Fed, and other topics.

The C-SPAN video of the breakfast can be viewed here. 

What follows are lightly edited excerpts from the breakfast conversation:

On Mr. Trump’s statement Tuesday, regarding the Southern border, that security is more important than trade:

Look, I think they’re both essential. I fully support him and his efforts to try to solve this border crisis, and the issue of border security is not an easy thing to do. It may not be cost free. I understand that.  But I don’t think it’s one or the other.

On how the US might minimize economic damage if Mr. Trump closes the US-Mexico border:

One area we’ve explored is try to keep the freight lanes open, the truck lanes. I’ve talked to various officials in DHS [Department of Homeland Security] and others who are more knowledgeable than I, and that is possible.

On when Mr. Trump will make a decision:

The president will give us his views today, or as days go by.

On Mr. Trump reportedly telling Federal Reserve Chairman Jerome Powell on the phone, “I guess I’m stuck with you”: 

You know, the president may have said that lovingly, very lovingly, you know what I mean? Think about that.

On whether the comment was, in fact, made “lovingly” – given Mr. Trump’s criticism of the Fed’s handling of interest rates:

Well, I wasn’t on the conversation. I’m just opening up that possibility. It might have been a very loving, affectionate, you know, kind of a huggy thing on the phone.

On Mr. Trump's nomination of Stephen Moore to the central bank’s board, amid reports of personal financial problems:

He continues to support Steve. I certainly do. People are being awfully hard on him. This town is a toxic town in some respects. We are fully behind him.

On US government planning for Venezuela if the Maduro regime falls:

Economic assistance and economic restructuring would begin immediately. It’s a question of getting hold of what I call the machinery of government – which we are working on, by the way. Lots of discussions going on with people in the National Assembly, the Guaidó folks, and so forth.

It would be a rescue plan, it would be a restructuring plan, it would be a plan that would put cash into the country, into the hands of the people who were starving.

Some very clever people are working on this inside the [US] government … using banks, iPhones, apps, many clever ways to get cash in there. And the cash will not be bolívars, it will be dollars, at least at the beginning. Dollars are the answer.