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story.lead_photo.caption White House chief economic adviser Larry Kudlow talks with reporters about trade negotiations with China, at the White House, Monday, Dec. 3, 2018, in Washington. (AP Photo/Evan Vucci)

WASHINGTON -- The White House's top economic adviser on Sunday signaled that President Donald Trump will stick to his guns on the trade war with China, though he acknowledged that Americans will pay the tariffs the president imposed.

In his first interview since high-level talks between Chinese and American officials broke up Friday without a deal, Larry Kudlow told Fox News Sunday that China has invited U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin back to Beijing.

But no date has been set so far for fresh talks, said Kudlow, head of the president's National Economic Council. It was likely that Trump would meet with Chinese President Xi Jinping during the Group of 20 meeting in Osaka, Japan, in late June, Kudlow said.

The Trump administration last week increased tariffs on $200 billion in Chinese goods to 25% from 10% and gave Beijing a month to seal a deal or face tariffs on all its exports to the U.S.

Lighthizer said the administration today would release details of its plans for tariffs on roughly $300 billion in imports from China. Kudlow said Sunday that it could be "months" before more tariffs go into effect.

Fox News Sunday host Chris Wallace asked Kudlow, "It's U.S. businesses and U.S. consumers who pay, correct?"

"Yes, I don't disagree with that," Kudlow replied, though he added that "both sides will pay" as China suffers losses from reduced exports to the U.S.

"In order to correct 20 years-plus of unfair trading practices with China -- as I said, unlawful trading practices -- I think this is a risk we should and can take without damaging our economy in any appreciable way," Kudlow said.

Trump insisted Sunday night that the tariffs would be advantageous for the U.S.

"We are right where we want to be with China," the president tweeted. "Remember, they broke the deal with us & tried to renegotiate. We will be taking in Tens of Billions of Dollars in Tariffs from China."

But estimates suggest the hit to U.S. growth will be up to 1% of gross domestic product, and that the hit to the employment market will be more than 2 million jobs. Gregory Daco, an economist at Oxford Economics, is more conservative, arguing the tariffs would reduce U.S. growth by half a percentage point and cost 300,000 jobs.

Kudlow called all those numbers "wildly exaggerated" compared with internal White House estimates. The U.S. might lose 0.2% of GDP, Kudlow said, adding that possible job losses would be "way, way below" even 300,000.

"You gotta do what you gotta do," Kudlow said. "This is worthwhile doing."


Kudlow said a key reason to push for a change the U.S.-China trading relationship was for the long-term benefit of U.S. farmers, who have been hit by the tariffs.

"I will note, as others have ... maybe the toughest burden is on farmers," Kudlow said. "The agriculture sector, we get there. We gave help to them before on loss exports. I think we had an authorization of $12 billion. We will do it again if we have to and if the numbers show that out."

He said the tariffs produced "perhaps something of a magnitude this past 12 months of maybe $25 billion" in customs duties, which could be used to help farmers.

Trump seemed to support that idea on Sunday, writing on Twitter that the money generated by tariffs could be used to buy up American agricultural products.

"We will then spend (match or better) the money that China may no longer be spending with our Great Patriot Farmers (Agriculture), which is a small percentage of total Tariffs received, and distribute the food to starving people in nations around the world," Trump tweeted.

But critics question whether the U.S. is really capable of shipping billions of dollars in federal farm-good purchases as humanitarian aid, up from the $1.5 billion worth of goods now bought and shipped annually under the U.S. government's Food for Peace program. If the government can't ship the farm products it buys, it will stockpile them.

The U.S. government bought supplies from farmers in the 1980s after President Jimmy Carter banned grain exports to the Soviet Union, which sent prices tumbling. The purchases were through the Commodity Credit Corporation -- an entity established in 1933 to stabilize, support and protect farm income as well as prices.

"Through executive order, Trump can buy the $15 billion through the Commodity Credit Corporation and then hold it for donation or long-term storage," said Dan Basse, president of Chicago-based consultants AgResource Co. "I honestly see many pitfalls of all of this as it is a step backwards."

Corn and wheat stockpiles wound up climbing to a record in the mid-1980s. One of the worst droughts in history hit America in 1988, solving the overhang.

The purchases aren't a "very effective" way to deal with overhang, "and that's what the government eventually realized," said Arlan Suderman, chief commodities economist at brokerage INTL FCStone Inc. "It does help support cash prices, but it limits rallies in the market because the market knows if it rallies too much, there are all those bushels still in the bin that will come out."

On top of that, many farmers are producing U.S. corn and soy for use in animal feed or biofuel, and nations in need are usually seeking food-grade commodities such as rice and wheat, said Joseph Glauber, former chief economist at the U.S. Department of Agriculture.

"Bangladesh does not want raw U.S. soybeans -- they want wheat, or wheat flour, milk powder and such," Basse said.


On Sunday, figures on both sides of the aisle criticized Trump's handling of the China trade talks.

Sen. Rand Paul, R-Ky., an ally of Trump, said on ABC's This Week that he is worried about the effect the tariffs will have on the U.S. economy.

"I know of a big company that told me that the tax cuts specifically helped them but that the tariffs are almost equal in punishing them," Paul said, referring to the Republican-led tax overhaul passed in 2017.

In an appearance on Face the Nation on CBS, Henry Paulson, who was treasury secretary under President George W. Bush, said that although "we don't have many good tools" to put economic pressure on China, tariffs are not an ideal choice.

"They're a tax on the American consumer," said Paulson, who is chairman of the Paulson Institute and a former chief executive of Goldman Sachs. He added: "Will it hurt us? If this persists too long, it will. There'll be a cost to it."

Paulson said he would "prefer the tactic of working with our allies to put pressure" on China.

Sen. Kamala Harris, D-Calif., a 2020 presidential candidate, said on CNN's State of the Union that the Trump administration has "failed to understand that we are stronger when we work with our allies on every issue, China included."

"This president seems to believe and has a preference for conducting trade policy, economic policy, foreign policy by tweet," Harris said. "And that's irresponsible."

Among the lawmakers defending Trump on Sunday was Sen. Lindsey Graham, R-S.C.

"I'm 100 percent with the president," Graham said on Fox News Channel's Sunday Morning Futures.

Graham argued that Trump is "trying to break the stranglehold China has" on the global supply chain, and that while American consumers will pay more, "eventually, China is going to get hurt more than us."

"When you put tariffs on products coming out of China, it makes other countries a cheaper place to do business, which eventually moves market share away from China," Graham said. "This is what Trump's trying to do."

Information for this article was contributed by Todd Shields, Ben Bain, Isis Almeida, Michael Hirtzer, Mike Dorning and James Attwood of Bloomberg News; by Christopher Rugaber of The Associated Press; and by Felicia Sonmez and Taylor Telford of The Washington Post.

Photo by NYTNS
Larry Kudlow
Photo by AP
Rand Paul
Photo by Bloomberg
Henry "Hank" Paulson, chairman and founder of the Paulson Institute and former U.S. Treasury secretary, center, walks to the U.S. Court of Federal Claims in Washington, D.C.
Photo by AP
Kamala Harris
Photo by AP
Lindsey Graham

A Section on 05/13/2019

Print Headline: Tariffs a cost for U.S., too, Kudlow says


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  • RBear
    May 13, 2019 at 6:19 a.m.

    At least Kudlow isn't lying about the impact of tariffs like his idiot boss is. Yes, they are paid by the consumer and since the money goes into the Treasury you could consider it a tax on the American public by Trump. With regard to the agri-buyback plan, that is just a disaster waiting to happen and hasn't been thought out, much like many of the hastily crafted "plans" by this administration (separating immigrant families comes to mind).
    Maybe if Trump's team were actually negotiating with China on real terms instead of having to deal with "deal by tweet" as Trump likes to do. All that does is stroke his ever fragile ego and doesn't accomplish one single thing (another "deal" comes to mind with NK).

  • Waitjustaminute
    May 13, 2019 at 8:05 a.m.

    This issue is a test for readers. We will see who is capable of comprehending the fact that China is a horrible trade partner, has been for decades,and recognize that it is way past time to stand up to them. The rest will take this opporunity to go on their daily anti-Trump tirade. This issue is far bigger than any one President, and ought to be viewed through a non-partisan lens.
    = = = = = = = = = = = =
    Or, we can just keep giving China our lunch money every day on the bus, and keep letting them have the run of the playground like the school bully they are.

  • BoudinMan
    May 13, 2019 at 8:18 a.m.

    Kudlow accidentally told the truth that trump will not state, or truly does not understand. Kudlow will pay for this gaffe.

  • RBear
    May 13, 2019 at 8:19 a.m.

    WJAM so tariffs are the only way to deal with this?

  • RBear
    May 13, 2019 at 8:22 a.m.

    To go a step further, has anyone really analyzed IF the US could really deal with that kind of economic production? Would we actually be able to afford it? I know it's an easy totem to yell at, much like the wall that will solve all problems including world hunger and peace. But, the economic reality is that if the US actually produced some of these goods, they would a) be unaffordable due to production costs in a tight labor market and b) probably limited in supply due to the production capacity required.

  • Skeptic1
    May 13, 2019 at 8:22 a.m.

    A little grit and pain now will have long term benefits we have lost thanks to previous administrations that sold off our manufacturing jobs and intellectual property to China. What China does today is for China's longer goal of global domination, finally we have a president that understands that.

  • seitan
    May 13, 2019 at 8:50 a.m.

    Septic. Only 15% of Trump's own products are made in the USA. So what does he understand?

  • Waitjustaminute
    May 13, 2019 at 9:22 a.m.

    RBear, tariffs weren't the first resort. I've been reading about this issue for a long time. We've tried to get China to the table to solve some of these issues, to no avail. Eventually, you come to tariffs, and you either have the spine to impose them or you don't.
    There was a good conversation on a different article over the weekend on this same topic. SeanJohn weighed in; apparently he's in a business that's directly affected, and while he didn't come out in support of the tariffs, he acknowledged that China is a terrible trading partner, that something has to be done, that there are other variables affecting price such as fluctuating shipping costs, and he's convinced we'll get through this. I defer to his expertise on the subject.
    = = = = = = = = = = = = =
    Regarding your 8:22 post, domestic companies in some markets will be able to fill some of the void; that list was included in the previous article, and electronics is the only one I remember off the top of my head. Other transactions will just move from China to other countries, but I'd rather do business with those other countries if we can do it more fairly.

    May 13, 2019 at 9:41 a.m.

    It's a good thing that the current crop of Dems were not in charge at the time of the two World Wars. They have not a clue about short term pain/costs in order to obtain a longer term goal.
    Perhaps some of that special Blue Kool-aid can be exported to China - with utopia to follow.

    May 13, 2019 at 9:43 a.m.

    Even better plan ---- if we would just burn the Constitution in favor of a One-World Government run by the UN --- we wouldn't be in this situation.