James S. Brady Press Briefing Room
1:10 P.M. EDT
KUDLOW: Hello, everybody. I’m Larry Kudlow. So some brief stuff on the G7 meeting in Charlevoix. My high school French pronunciation. Is it any good?
Basically, the key points: Number one, economic growth. The United States now has the fastest growing economy in the world, according to the OECD, or at least the fasting growing economy among the industrialized nations.
Second, there will be trade discussions, as you might imagine.
Third, there will be some important bilateral meetings. President Trump will be meeting with Prime Minister Trudeau and President Macron. Important bilaterals.
And finally, I think one of the key points, of course, on the eve of the North Korean summit in Singapore — one of the key points will be shared security issues among the allies.
And if I may, just perhaps because it’s my favorite subject, the United States economy is growing. We’re pushing through 3 percent. Some said it couldn’t be done. It is being done, and we’re proud of it. And I think President Trump’s policies of lower taxes and major regulatory rollback are a key part of this issue. And I also think his role as probably the strongest trade reformer of the past 20 years not only protect American interests, but to open up avenues of growth for our business and our workers, and frankly, to help open up world growth. The world trading system is a mess. It is broken down. Insofar as fairness and reciprocity and, ultimately, free trade, I think this is contributing to our economic growth and our confidence.
A key point here on the economy is small-business confidence, record high or nearly so. Consumer sentiment, I guess best in 15 or 20 years at least. And of course, the job numbers have been superb. A recent article in The New York Times suggested nothing better could be written about the job performance. I loved reading that. And unemployment rates are down across the board. Really, we haven’t seen such low unemployment in many, many decades for all categories, I might add.
So I think the policies are working, and my great hope is that our friends at the G7 will take notice of these policies and work with us to extend and expand them so we can have a prosperous U.S. and world economy. So these will all come up at Charlevoix.
Yes, ma’am.
Q Thank you, Mr. Kudlow. Appreciate it. A couple of questions on trade with China, if I may. First, have you reached a deal to lift the ban on ZTE as previously reported? And if so, what can you tell us about it?
KUDLOW: No decision has been reached by both sides, as of now. And of course, I refer you to Wilbur Ross, Secretary of Commerce. But as of this moment, no decision has been reached by both sides.
Q Secondly, in terms of your focus on China, and tariffs on China, there seems to be a dual focus of this administration on lowering the trade deficit with China, but also on structural reform. How do you see the more important of those goals? And what are you doing to try to achieve the structural reform in particular?
KUDLOW: You know, they are absolutely related; integrated thoughts. In other words, the negotiations between the U.S. and China regarding trade will lower the trade deficit if it works out. There are no deals at the moment. But the way you do that — this is an important point. I’m not sure folks have sort of picked up on this, and I appreciate your question on this. This is not a government to government. This is not the Chinese government buying a bunch of natural gas and soy beans from America. This is about reducing tariff rates and non-tariff barriers that will permit the increase in U.S. export sales to China. That’s the actual mechanism. And I don’t think that’s been a clear point. It’s an economic point. That’s how you do it. And that represents structural change — important structural change.
Now, as you know, there are other issues here regarding technology transfers and theft of IP and so forth. But in terms of the — and if you do that, if you lower the tariff rates and if you lower the non-tariff barriers and you permit increased U.S. export sales — we are the most competitive economy in the world, so we will get that job done — then the trade gap will probably fall. That’s how that will work.
Yes, please.
Q Going into the meeting — the Finance Minister’s meeting over the weekend — the French Finance Minister described this group as now the G6 plus one. Angela Merkel said there could be contentious discussions about trade. Are these alliances at a low point? And how does the U.S. plan to respond to these criticisms and concerns?
KUDLOW: Well, look — we’re talking everything through. There may be disagreements. I regard this as much like a family quarrel. I’m always the optimist. I believe it can be worked out. But I’m always hopeful on that point. This is a G7 meeting, and the presidents and heads of state will get together.
Let me add one thought to that, though. The President — President Trump is very clear with respect to his trade reform efforts that we will do what is necessary to protect the United States, its businesses, and its workforce. So that we may have disagreements, we may have tactical disagreements, but he has always said — and I agree — tariffs are a tool in that effort. And people should recognize how serious he is in that respect.
Q Do you expect him to make any changes to the tariffs on Canada or the EU in this meeting? There are some reports that Secretary Mnuchin had to push for changes with Canada.
KUDLOW: I’m going to leave that to the meetings, okay? The meetings will produce stuff, okay?
Lots of hands. Sorry. Yes, sir. Please.
Q Thanks a lot, Larry. You mentioned the President will be having a bilateral during the G7 with Canadian Prime Minister Trudeau. How would you describe relations right now between the U.S. and Canada? Are they better than have existed in prior administrations, or are they worse than have existed in prior administrations?
KUDLOW: I don’t want to make comparisons with prior administrations.
Q Please. Please, for my benefit. (Laughter.)
KUDLOW: Just between us. I get it. (Laughs). Appreciate it.
Look, President Trump talks to Prime Minister Trudeau a lot and continues to do so. I think the bilateral meeting that’s scheduled between the two is a really good thing and I think they’ll walk through a lot of these issues. I have no doubt that the United States and Canada will remain firm friends and allies, whatever short-term disagreements may occur. So I would say relations are very good.
Yes.
Q What are the prospects for NAFTA being renegotiated this year?
KUDLOW: Well, we’re still talking. Communication lines are open. I don’t want to make a prediction. Ambassador Lighthizer has the play on that. Everyone is still talking.
Yes.
Q Yes, sir. Could you talk a little bit about —
KUDLOW: Sorry, it’s actually the one behind you.
Please, feel free.
Q All right, thank you. Regarding trade deficits. The President often talks about trade deficits as if they’re their own problem and other countries aren’t buying our goods. I know that you’re saying that the issue is tariffs, and lowering trade barriers will reduce trade deficits. What happens when the tariffs come down, the barriers come down, and the trade deficit doesn’t go down? What happens then, sir?
KUDLOW: Well, look — you know, supply and demand, and global markets subject to macroeconomic factors, that stuff is pretty hard to predict. But I think it is reasonable to assume that if our neighbors and allies, and whoever, lower their trade barriers, we will export significantly more, frankly, across the board.
And if I could expand on that thought. The United States economy is going through a very positive transformation right now, as I said earlier: lower tax rates, rollback of regulations. The war against business is over. The war against success is over. The war against energy is over. We have now freed up the animal spirits; you can see that by the confidence indexes. We’re rolling. The U.S. economy is rolling.
So if you give us a chance, foreign countries, we will fill that bill. We will increase export sales in a significant way. Now, I can’t promise — nor would I predict — future trade gaps, but I’m saying it is bound to have a positive impact.
Q But, sir, when the President talks about, for instance, automobiles, he complains that, for instance, Germans don’t buy American cars. Germany has a luxury car industry that’s world-renowned. Why would they buy our own cars? That’s supply and demand right there. It sounds often like the President’s problem is that other countries aren’t buying our goods, not that we’re not able to sell them to other countries.
KUDLOW: By and large, I don’t agree with that. But let me just back up. Here’s the President’s key thought on this: reciprocity. And one of the problems, one of the reasons for the breakdown of the trading system — the world trading system, as I described, which the President is trying to fix — in the last 20-some-odd years, we’ve seen a lack of discipline; tariff and non-tariff barriers have gone up. There has been a lot of protectionism.
The United States, by the way, we have the lowest average tariff in the world. And if you go down a laundry list of industries, you will see we are much lower. Our tariff rates are much lower than our competitors.
So his point is we should all have a level playing field. He calls it “reciprocity.” I think it’s a very apt description. And that’s the problem. If you bring down the barriers, and you equalize the level of the playing field, then we’ll let nature take its course, we’ll let markets take their course, and we will see.
But I think the products we make here have improved enormously and will continue to improve enormously. And that’s really the message of this economic recovery.
So we’ll wait and see on that, but that’s the mechanism. As I said to the other question, the way you lower your trade gap, the way you increase your exports is lower the barriers.
And again, I want to say, other Presidents, in both parties, have paid lip service to this issue of the lack of reciprocity and China’s particularly bad behavior, but nothing ever comes of it. This President has the backbone to take the fight, and he will continue to make the fight because he believes it is in the best interest of the United States and also the rest of the world.
Q Larry —
KUDLOW: Yes.
Q The question that they’re asking in world capitals is, is the United States committed to a framework that was set up after World War II — the general agreement on tariffs and trade, the World Trade Organization — is President Trump backing away from GATT and the WTO?
KUDLOW: No. No. Look, let me be very clear — important question: Don’t blame Trump. Blame the nations that have broken away from those conditions. Very important point. All right? I’m not here at the podium to call out countries and individual names and so forth. But you know from our own work, Trump is trying to fix this broken system.
It was a good system — I agree with you — and it lasted for a bunch of decades. But that system has been broken in the last 20 years-plus. The World Trade Organization, for example, has become completely ineffectual. And even when it makes decisions, even in the rare moments when it makes decisions, important countries don’t even abide by them.
So you’re right about that framework from the mid-1940s on. I think it worked beautifully. I think free world trade is a very good thing indeed. But it is broken, and President Trump is trying to fix it. And that’s the key point.
As I’ve said before, I think he’s the strongest trade reformer in many decades.
Q The President of France has said that it’s possible that if these frameworks break down, it could lead to war. He said that.
KUDLOW: Well, I won’t comment on what the President said. I will only say this: Each country has a responsibility to reengage the world trading system. All right? We are making requests. I’d like — the President would like other countries to deal with our requests. So far, they have not in any satisfactory way. That would help solve the problem. And hopefully, this G7 meeting, which will take up trade in some considerable form, will move this along.
Yes.
Q In 2002, we went through the same thing with the Bush steel tariffs, and that was a disaster. We ended up getting fined by the WTO, and we had to pull back those tariffs, which was 30 percent knocked to 25 percent two years earlier than they were supposed to expire. How is this different than that? Because the reaction from the world was the same. The EU, all our trading partners, the same reaction. And there was a trade war. There was a trade war.
KUDLOW: Oh, I don’t think there was a trade war. But call it what you may. That’s — I don’t think we’re — I think what we’re engaged with here is trade disputes that need to solved.
But I’ll come back to my point. No administration, in either party, has made this case in a full-throated, comprehensive way as President Trump is now doing. I think that’s the difference.
Yes. Yes. Yes, sir. I owe you. Yes, please.
Q Okay, thank you. Just, since a lot of countries now are coming up with retaliatory tariffs and taking their cases to the WTO, will this administration respect the decisions that come out of the WTO on this?
KUDLOW: You know, the United States — the President has said this many times: We are bound by the national interests here more than anything else. All right? We’re always interested in the World Trade Organization. Ambassador Lighthizer, in fact, has filed complaints in the WTO with respect to Chinese practices and the practices of other nations. So we’re still working through the WTO.
But international multilateral organizations are not going to determine American policy. I think the President has made that very clear.
Q Can you describe — you talked about the summit, that there’s going to be a lot of conversations, both bilateral and otherwise, at the summit. Is there some expectation within the administration of an actual outcome? Is there some — you know, do you expect some kind of decision, either on some of these tariff issues on pushing NAFTA forward, on some kind of communiqué that would push either — push for either on trade, or on Iran, or on any of the other issues?
KUDLOW: We’ll see what comes of it. We’ll see. These — we’re going to have all these discussions. It’s early right now.
Q It’s not early. We’re a couple of days from the summit.
KUDLOW: For these kind of decisions, let them meet first. Let them meet; let them discuss. And then we’ll see what happens.
Eamon.
Q Treasury Secretary Steven Mnuchin recommended to the President this week that the President extend an exemption on steel and aluminum tariffs to the Canadians. There’s been a report about that.
KUDLOW: The report was incorrect.
Q So he did not recommend an exemption for the Canadians?
KUDLOW: He did not.
Q Is there anybody in the administration who is recommending an exemption?
KUDLOW: I don’t want to go around the horn on that. I’m just saying there was articles written about a meeting we had. I was in that meeting. I talked to the Treasury Secretary earlier today. This was funny. Neither of us said a word in that meeting. So that story is patently false. Okay? Patently false.
Q A quick scheduling follow-up, Larry.
KUDLOW: Yes.
Q Thank you very much. I appreciate it. It’s one thing to talk about increased tariffs with, say, Mexico or Canada, whose economies are much more dependent on U.S. trade than, say, a more nefarious actor like China. How is it in China’s interest to have a meeting of the minds or even come to some sort of an agreement to level the playing field considering the massive amount of trade that happens between our two countries?
KUDLOW: You mean U.S. and China?
Q Yes, sir.
KUDLOW: Look, of course it’s in their interest. I mean, they do a lot of business here. We import a lot.
Q They’ve done well with the way they’ve been handling things already. Why would they want to change it?
KUDLOW: Well, I don’t know. I mean, from the U.S. standpoint it’s a very unbalanced picture, and the President would like to remedy that. That’s a key point.
Secondly, as we have said on a number of occasions, China had engaged in unfair and frequently WTO illegal trading practices. What’s more, regarding IP theft, technology — forced technology transfers, and other matters, China has not behaved well. Now, this could be remedied if the two countries can reach agreements in certain areas. Thus far, we have not. But China sells a lot of goods here. Don’t forget that. That’s, of course, the source of our trade deficit. And President Trump would like to balance that out and bring down barriers and make new arrangements and see if China will play by the rules. That’s an important point.
Yes. Yes.
Q You’ve talked about China’s bad behavior and you’ve acknowledged the tension between the other countries at the G7. Are you concerned that that tension is going to affect your own negotiations with China? Because it seems like you could really use these allies right now. And instead of presenting a Western front against China, the U.S. is pretty isolated.
And my second question is, we’ve heard a lot from President about his summit with Kim Jong Un. And he’s spoken very little about the G7. Is he going to be too distracted by his trip to Singapore?
KUDLOW: No. No, no, no.
Q Or to my colleagues point, what is his main goals? We haven’t heard of a proactive agenda for the G7.
KUDLOW: We’re in the process of briefings and discussions here. And as I said at the top, the outline here is easy: growth, trade, important bilateral talks, and important shared security talks.
Let me go to the first part of your question. The whole world agrees with us regarding China’s trade practices. The whole world. And, in fact, many parts of that world have filed their own complaints on exactly the same grounds, either with the government of China or with the World Trade Organization. So make no mistake about that.
Our President has taken action — strong, decisive action. As I said, I continue to refer to him as a trade reformer. And, by the way, I’ll just elaborate once more, he regards himself as a free trader. But until we can deal with these unfair practices and so forth, we will not have fair trade. Until we can have reciprocal relationships, we will not have free trade, we will not have fair trade. So I think his cause is just, and I think the rest of the world agrees with him. I mean, it always has from day one.
Yes.
Q Could you characterize the President’s mindset going into this, knowing that he will likely encounter some awkward conversations? Does he want to go on this trip?
KUDLOW: The President wants to go on the trip. The President is at ease with all of these tough issues. He’s proven himself to be a leader on the world stage. And he’s achieved great successes, I might add, in foreign policy. So I don’t think there’s any issue there at all.
I want to be fair. Yes.
Q Thanks, Mr. Kudlow. And to your point about the President’s mindset — the allies, including British Prime Minister Theresa May, has called the tariffs “unjustified and deeply disappointing.” Her counterpart Justin Trudeau called the national security rationale “insulting.” What’s the President think of those remarks?
KUDLOW: There are disagreements. He’s sticking to his guns, and he’s going to talk to them. Communication — the lines are open. The negotiations are ongoing, not at the presidential level but at the trade level, again, with Ambassador Lighthizer and Commerce Secretary Wilbur Ross and Treasury Secretary Steve Mnuchin. Talk is the best remedy here, all right? We have different points of view in some cases. In some cases, they’re tactical questions. My view? We can get through this. We have in the past.
Q But do those tensions with stalwart allies not give him pause about the (inaudible)?
KUDLOW: No. Look, there’s always tension about something. There’s always tension about something.
Last one. Yes.
Q If I can, just help us understand how to read the President’s words. He tweeted this week, “Best economy & jobs EVER.” But unemployment — as you know, though there’s a good story to tell — unemployment is not at an all-time low. GDP growth is not at an all-time high. So while the economy is doing well, how should we read the President’s words? Is it hyperbole? Should we not take him literally?
KUDLOW: It’s factual.
Q But in fact —
KUDLOW: 3.8 percent unemployment rate is among the lowest on record.
Q Among. Correct.
KUDLOW: That’s correct.
Q 2.5 percent in 1953. So it’s not the best ever. So it is hyperbole. Do you agree?
KUDLOW: He’s stating facts. The facts stand on their own. I’m not going to quibble with you about such things.
Regarding 3 percent growth, virtually every economist on the other side of the aisle — and they’re friends of mine; many of them are good friends of mine — said 3 percent growth couldn’t be achieved; we couldn’t do better than 1 to 2. You heard it. I heard it. We’ve argued and debated it. Okay? We are now moving into 3 percent zone. That is a huge achievement.
The President’s policies — again, pro-growth policies, lower taxes, lower regulations, taking the handcuffs off business, telling people to be as entrepreneurial, risk-taking as they properly can, providing confidence — these things have added up to a tremendous transformation of the economy, which, in my judgment, is only just beginning. So to me it’s a factual statement.
Let me just say thank you to all of you. Appreciate it very much.
END
1:34 P.M. EDT
