Larry Kudlow: Trump’s tariffs have hurt China


STUART: HE’S WITH US. LARRY KUDLOW RIGHT THERE. YES. HEADS UP THERE, LARRY. THANKS FOR BEING WITH US. WE ALWAYS APPRECIATE IT. FORGIVE ME, BUT I WANT TO START WITH SOMETHING A LITTLE DIFFERENT FROM WHAT I WAS JUST TALKING ABOUT A MOMENT AGO. PETER THIEL CALLED OUT GOOGLE LAST NIGHT, SAID THEY SHOULD BE INVESTIGATED BY THE FBI AND THE CIA. HE SAYS THEY’RE WORKING FOR CHINA’S MILITARY AND NOT OURS. THAT’S A PRETTY STRONG CHARGE. HE CALLED GOOGLE TREASONOUS. YOU ON BOARD WITH THAT?>>NO, I’M NOT. LOOK, I HAVE NOT SPOKEN TO PETER THIEL ABOUT THIS. I DID READ SOME NEWS STORIES, NOT SURE WHERE HE’S GOING, WHAT HE’S POINTING TO. I MEET WITH GOOGLE, I MEET WITH GOOGLE’S CEO ON A REGULAR BASIS. I THINK THEY’RE WORKING FOR AMERICA, FOR OUR MILITARY, NOT FOR CHINA. I DON’T KNOW — PETER THIEL IS A GOOD MAN, HAS BEEN A GREAT SUPPORTER OF THE TRUMP ADMINISTRATION, HE’S A VERY SMART GUY. I’M JUST NOT SURE WHERE HE’S GOING ON THIS. SO I HAVE MY DOUBTS BUT ONE NEVER KNOWS. JUST LET ME SAY, YOU KNOW, GOOGLE, I GUESS IT’S VERY FASHIONABLE TO PICK ON SOME OF THESE BIG TECH COMPANIES. MAYBE SOME DESERVE IT, MAYBE SOME DON’T. BUT I WANT TO SAY IN MY TENURE HERE IN THE PAST YEAR AND A HALF, I’VE HAD LONG DISCUSSIONS WITH THE GOOGLE PEOPLE, WITH THEIR CEO, THEIR NEW CEO, LONG DISCUSSIONS WITH TIM COOK OF APPLE. I HAVE NOT MET WITH ALL THE TECH COMPANIES BUT MY SENSE IS THEY ARE VERY SUPPORTIVE OF A, THIS COUNTRY, B, THIS PRESIDENT AND HIS AGENDA. I HAVE NOT FOUND PROBLEMS THERE. AND I THINK THEY’RE WORKING HARD AND I DON’T BELIEVE FOR ONE MINUTE THAT GOOGLE IS SOMEHOW COMMITTING QUOTE UNQUOTE, TREASON. I DON’T GET THAT. I HAVE TO HEAR MR. THIEL’S WHOLE STORY. STUART: COULD YOU UPDATE US ON TRADE? I MEAN TRADE BETWEEN THE U.S., MEXICO, CANADA, USMCA, TRADE BETWEEN THE U.S. AND JAPAN, TRADE BETWEEN THE U.S. AND THE EUROPEAN UNION, AND OF COURSE, TRADE BETWEEN THE UNITED STATES AND CHINA. IT SEEMS LIKE THERE’S NOT A LOT GOING ON IN THESE TRADE AREAS. CAN YOU GIVE US AN UPDATE, ANYTHING POSITIVE?>>WELL, YEAH. I THINK THERE’S A LOT OF CONSTRUCTIVE THINGS GOING ON. LET ME JUST START WITH USMCA, WHICH IS A TERRIFIC TRADE DEAL, NEGOTIATED BY AMBASSADOR LIGHTHIZER. HE’S WORKING VERY HARD UP ON THE HILL WITH, I MIGHT ADD, THE COOPERATION OF SPEAKER PELOSI. I’M OPTIMISTIC WE HAVE A VERY GOOD CHANCE OF GETTING THAT THROUGH. THAT USMCA DEAL, BY THE WAY, IS WORTH ABOUT A HALF A PERCENT OF ADDITIONAL REAL GDP PER YEAR TO THE UNITED STATES. STUART: CAN YOU GET IT THROUGH CONGRESS? WILL A DIVIDED HOUSE DO IT?>>WELL, LOOK, I THINK WHEN SPEAKER PELOSI GIVES US THE VOTE AND I REMAIN OPTIMISTIC ON THAT, I REMAIN OPTIMISTIC, THAT’S JUST ME TALKING, I THINK IT CAN PASS BUT AGAIN, AMBASSADOR LIGHTHIZER CONTINUES TO DISCUSS WITH HER AND HER LEADERS, I THINK THAT’S A VERY GOOD SIGN. SO WITHOUT PUTTING ANY TIMETABLES ON IT, YES, I REMAIN VERY CONSTRUCTIVE AND I JUST WANT TO SAY ONE MORE THING HERE. ONE MORE TIME, HOW STRONG THIS IS FOR THE AMERICAN ECONOMY WHICH IS WHY WE BELIEVE WE WILL GET BIPARTISAN SUPPORT, NOT JUST GDP, BUT ALSO PERHAPS A COUPLE HUNDRED THOUSAND NEW JOBS, PERHAPS $100 BILLION IN NEW DIRECT INVESTMENT. THERE IS OLD ECONOMY AND NEW ECONOMY PROVISIONS IN THERE. THERE’S CURRENCY STABILITY, THERE’S LABOR PROVISIONS, THERE’S ENVIRONMENTAL PROVISIONS. IT’S THE MOST REMARKABLE TRADE DEAL AND I BELIEVE AT THE END OF THE DAY, SOMETIME THIS YEAR, WE ARE GOING TO GET A POSITIVE VOTE. STUART: CAN YOU GIVE ME AN UPDATE ON CHINA TRADE TALKS? I ASK THIS QUESTION BECAUSE WE GOT NEWS THIS MORNING THAT CHINA’S ECONOMY IS GROWING AT ITS SLOWEST RATE IN ALMOST 30 YEARS. MY QUESTION IS, IS THAT BECAUSE OF THE TRADE FIGHT WITH AMERICA, OR IS IT BECAUSE THERE’S SOMETHING FUNDAMENTALLY WRONG WITH THE CHINESE ECONOMY?>>WELL, MAYBE A LITTLE BIT OF BOTH. IT’S A VERY STATE-CONTROLLED GOVERNMENT-ORIENTED ECONOMY. TO ME, THAT’S DAMAGING RIGHT THERE, LACKS THE KIND OF FREE ENTERPRISE VIBRANCY THE UNITED STATES HAS, FOR EXAMPLE. I THINK CHINA HAS BEEN HURT. WE TALKED A LOT ABOUT THE ECONOMIC BURDEN OF PRESIDENT TRUMP’S TARIFFS FALLING MORE HEAVILY ON CHINA. BIG STORY IN THE PAPER TODAY, BUNCH OF COMPANIES ARE ACTUALLY LEAVING CHINA, CHANGING THEIR SUPPLY CHAINS AND MOVING ELSEWHERE. SOME WILL GO TO OTHER COUNTRIES IN ASIA. SOME FRANKLY, WE HAVE HAD REPORTS, ARE COMING TO THE UNITED STATES. I THINK THIS HAS HURT THE CHINESE A LOT. REGARDING THE TALKS, LIGHTHIZER AND SECRETARY MNUCHIN HAVE BEEN TALKING TO CHINA’S TOP PEOPLE. THERE MAY BE A FACE-TO-FACE MEETING IN THE CARDS, THOUGH IT HASN’T BEEN FORMALLY DECIDED YET, AS FAR AS I KNOW. I WILL ADD ONE LAST THING. PRESIDENT TRUMP HAS SAID ON SEVERAL OCCASIONS HERE IT’S A GOOD THING TO RESTART THE TALKS. WE HAVE OPENED THE DOOR SLIGHTLY TO NON-NATIONAL SECURITY TRANSACTIONS WITH HUAWEI AND WE HAVE FOR THE MOMENT SUSPENDED ANY NEW TARIFFS, BUT, BUT, BUT, BUT, BUT, WE DIDN’T EXPECT THE CHINESE TO BE LAUNCHING A SIGNIFICANT PURCHASE OF U.S. AGRICULTURE PRODUCTS, GOODS AND SERVICES. WE HAVEN’T SEEN THAT QUITE YET. BUT WE ARE VERY KEENLY WATCHING THE DEVELOPMENTS THERE AND I HOPE THAT THEY MAKE GOOD ON THAT PROMISE. STUART: ARE THEY BALKING AT HOW MUCH AGRICULTURAL PRODUCE WE WANT THEM TO BUY?>>STU, I DON’T WANT TO GET INTO DETAILS ON THAT. ALL I’M SAYING IS WE’RE WAITING FOR SOME ANNOUNCEMENTS ON THEIR SIDE. THAT WAS COVERED DURING THE DISCUSSIONS IN OSAKA AND I KNOW THAT SECRETARY MNUCHIN AND AMBASSADOR LIGHTHIZER HAVE MENTIONED THIS IN THEIR CONVERSATIONS WITH CHINESE OFFICIALS. STUART: WE HAD REPORTS THIS MORNING THAT PRESIDENT TRUMP IS NOT HAPPY WITH THE WILBUR ROSS COMMERCE SECRETARY IN PART BECAUSE THAT QUESTION ON CITIZENSHIP WAS NOT GOTTEN INTO THE CENSUS, AND THE CENSUS DEPARTMENT IS PART OF COMMERCE DEPARTMENT WHICH IS RUN BY WILBUR ROSS. HAVE YOU HEARD ANYTHING ABOUT MR. ROSS LEAVING?>>I HAVE NOT. WILBUR AND HIS DEAR WIFE HILARY ARE LONG TIME, LONG TIME MULTI-DECADE FRIENDS OF THE KUDLOW FAMILY. I LOVE WORKING WITH WILBUR IN THIS ADMINISTRATION. HE BY THE WAY WAS A GREAT STAR IN “THE KUDLOW REPORT” MANY YEARS AGO ON ANOTHER NETWORK. I KNOW I’M NOT ALLOWED TO SAY THAT. I JUST LET THE CAT OUT OF THE BAG. HE’S DONE A FINE JOB AT THE COMMERCE DEPARTMENT AND SO FAR AS I KNOW, I HAVE NOT SPOKEN TO THE PRESIDENT ABOUT ANY OF THESE RECENT EVENTS, BUT WILBUR ROSS IS A GOOD MAN AND HAS DONE A GOOD JOB RUNNING COMMERCE. STUART: LATER THIS HOUR, I THINK IT’S LATER THIS HOUR, THE PRESIDENT’S GOING TO BE ON THE SOUTH LAWN HOSTING THE THIRD ANNUAL MADE IN AMERICA PRODUCT SHOWCASE. MANUFACTURERS ARE MOVING OUT OF CHINA BECAUSE OF THOSE TARIFFS. CAN YOU TELL US HOW MANY OF THOSE MANUFACTURERS ARE ACTUALLY MOVING BACK TO THE UNITED STATES? I KNOW THERE’S A BIG STORY ABOUT THAT THIS MORNING. IS THERE A REAL FLOOD COMING BACK HERE OR IS IT A FLOOD GOING TO OTHER PARTS OF ASIA?>>I THINK IT’S A LITTLE OF BOTH. THERE’S A LOT OF MOVEMENT OUT OF CHINA INTO ASIA AND THERE’S ALSO MOVEMENT OUT OF CHINA INTO THE UNITED STATES. I’M NOT GOING TO GO INTO A LOT OF HEAVY DETAIL. LOOK, USA, WE ARE VERY HOSPITABLE ENVIRONMENT, FRANKLY, MORE HOSPITABLE THAN CHINA, I THINK. I MEAN, WE GOT 21% CORPORATE TAX RATE. WE HAVE ROLLED BACK SO MANY REGULATIONS ACROSS THE BOARD. THE DOLLAR IS THE DOMINANT CURRENCY IN THE WORLD, AS THE PRESIDENT TWEETED JUST A FEW DAYS BACK. I THINK IT’S A GREAT PLACE TO INVEST. SO COME TO AMERICA, BUY AMERICA, COME BACK TO AMERICA. I WILL PERSONALLY SHAKE EVERYBODY’S HAND THAT COMES BACK TO THE COUNTRY. I BET YOU PRESIDENT TRUMP DOES, TOO. WE ARE VERY OPTIMISTIC ABOUT THAT PART OF THE STORY. AND I’M SHOCKED, STUART, I MEAN, I’M SHOCKED, HERE WE ARE, EIGHT OR TEN MINUTES INTO THIS GRUELING INTERVIEW THAT YOU HAVE SUBJECTED ME TO, IT’S ABOUT 120 OUTSIDE HERE, AND YOU HAVEN’T MENTIONED THE STRONG AMERICAN ECONOMY. YOU HAVEN’T MENTIONED THE FABULOUS JOBS REPORT THAT’S GOING ON. YOU HAVEN’T MENTIONED THE BIG STOCK MARKET RALLY. YOU HAVEN’T MENTIONED THE FACT THAT BLUE COLLAR WORKERS AND THE SO-CALLED NON-SUPERVISORY WORKERS ARE THE BIGGEST BENEFICIARIES OF THIS BOOM. I’M SHOCKED, IF I REACH OVER, I NEED SOME WATER TO COOL MYSELF DOWN. STUART: HAD YOU BEEN APPEARING ON A DIFFERENT NETWORK, YOUR OLD NETWORK, THEY WOULD OF COURSE HAVE RAISED THE ISSUE OF THE WONDERFUL ECONOMY, THE WONDERFUL MARKET, THE EXTREME PROFITABILITY, WOULDN’T THEY?>>WELL, I DON’T WANT TO MAKE PRESUPPOSITIONS ON THAT. I LOVE COMING ON THE STUART VARNEY SHOW. THAT’S WHY I’M ON THIS THING MORE. AT SOME POINT, YOU ALL ARE GOING TO HAVE TO GIVE ME A BOX OF CIGARS OR SOMETHING AS PAYMENT. I KNOW WE CAN’T DO DIRECT CASH. BUT LOOK, I DO WANT TO SAY, I DO WANT TO SAY AND REPEAT THAT THE U.S. ECONOMY IS VERY STRONG AND THAT’S WHAT THE JOBS REPORT AND WAGES ARE RISING AND I GROW WEARY, I WANT TO MAKE ONE POINT, I GROW WEARY AS I READ THESE ARTICLES AND SOME OF OUR CRITICS, SOME OF WHOM, I’M NOT POLITICAL SO I CAN’T GO DOWN THAT ROAD, BUT SOME OF WHOM APPEAR TO BE RUNNING FOR HIGHER OFFICE AND THEY ARE PAINTING A PICTURE OF AN ECONOMY DEEP INTO RECESSION. WE ARE IN A STRONG PROSPERITY BOOM AND EVERY DATA POINT SHOWS THAT AND WHEN WE GO INTO THE DISTRIBUTION OF THESE ECONOMIC BENEFITS, IT IS PRECISELY THE BOTTOM HALF, IN SOME CASES THE LOWEST 10% THAT HAVE ACTUALLY DONE THE VERY BEST IN THIS ECONOMY. SO I WISH YOU WOULD ASK ME ABOUT THAT. STUART: OKAY. HERE’S WHAT I WILL ASK YOU, IN THE LAST 20 SECONDS I’VE GOT AVAILABLE HERE. SECOND QUARTER OF THIS YEAR, WHAT’S OUR RATE OF ECONOMIC GROWTH?>>WELL, WE’LL SEE WHAT THE LAST DETAILS COME IN. WE DON’T HAVE ALL — STUART: UNDER 2%?>>I THINK WE ARE ON A 3% GROWTH PATH. WE HAD 3.1% AND 3.2% IN THE FIRST QUARTER. WE ARE STAYING WITH OUR 3% GROWTH PATH TO THE YEAR. THE TRENDS LOOK VERY GOOD. AGAIN, AGAIN, I GUESS IN THE BACK DOORWAY, THE ECONOMY, CONSUMERS, WE ARE SEEING A PICKUP OF BUSINESS PROFITS, THEY WILL OUTPERFORM THE USUAL DOOM AND GLOOM. I’M KIND OF THE HAPPY CAMPER TODAY EVEN THOUGH I’M WILTING IN THIS SUN. STUART: SORRY. GO BACK TO AIR CONDITIONING, LARRY. I UNDERSTAND THESE THINGS.

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