The following is a transcript of the interview with White House National Economic Council Director Larry Kudlow that aired Sunday, August 25, 2019, on “Face the Nation.”
MARGARET BRENNAN: Good morning and welcome to “Face the Nation.” Today, we are focusing on the economy, its impact on policy and politics. Throughout our show you will hear from voters about what it means for them. And we begin this morning with White House National Economic Council Director Larry Kudlow. He joins us from Saint Jean de Luz, France. Good morning, Larry.
LARRY KUDLOW: Morning, Margaret. Thank you.
MARGARET BRENNAN: The president was asked this morning if he regretted escalating the trade war with China. Then the White House released a statement saying, “he meant to say he only regretted not raising tariffs further.” Which is it? Are you escalating or de-escalating?
KUDLOW: Now, look. Actually it’s neither, but he didn’t quite hear the question this morning, but his thought was if he had any second thoughts, and he said sometimes he does, he would have actually raised the tariff, not lower it. But there is no change. A 5% additional tariff on $250 billion and then 5% additional tariff on the second tranche of $300 billion, which as you recall goes into place September 1st, and then December 15th because there are a lot of consumer exclusions. He is responding to the Chinese action. And I want to say, in my judgment at least, both actions were very temperate, very restrained alright? Both countries weigh in.
President Trump has got to defend the American economy which he has done and of course, as you know, our battle to stop unfair trading practices from China. More on that if you wish, but he’s continued the drumbeat. But I want to make one last point if I may: the negotiations between the two great countries continue. We had deputies teleconference meeting last week. Another one is coming up this week and the principals still expect the Chinese team to come to the United States in September. So both countries seem to be protecting their turf here. But the talks and negotiations continue and I think that’s very positive.
MARGARET BRENNAN: Do you expect China to retaliate to the tariffs the president put in place on Friday?
KUDLOW: I do not. I- I think, you know, his was an action to respond to their action. So I doubt whether they’re going to take another step.
MARGARET BRENNAN: Okay.
KUDLOW: I have not heard their official response yet. We’ll have to wait and see on that.
MARGARET BRENNAN: Larry, in the past you’ve been very clear that you think tariffs are essentially a- a tax on the American consumer and that it particularly hits low income families. How do you tell Americans that this is not going to spiral in a way that hurts them?
KUDLOW: Well look, one point- point I want to make is the economic burden of these tariffs is falling most heavily on China, probably by a factor of four or five to one.
KUDLOW: –As far as any impact here, I will argue as I have- it’s a very small, minimal impact. The burden of this thing is falling way on China. And let me just add to your other question the impact for ordinary American families. Look, consumer wages are booming, consumer spending is booming. Actually, the best performing sectors in terms of wage increase, Margaret, blue collar workers, middle income and lower income workers. The bottom 10 percentile is doing the best. And our tax cuts have actually provided at least, I don’t know, twenty five hundred, three thousand dollars less taxes, lower tax liabilities–
MARGARET BRENNAN: Right.
KUDLOW: –on ordinary, average American families. So the net- net is the tax cuts, in my judgment, far outweigh very small harm regarding the tariffs. And look the president, again, he has got to defend the American economy.
MARGARET BRENNAN: Sure, but- but Larry that success you just–
KUDLOW: Chinese trading practices, and IP theft has done great damage to certain sectors of our economy.
MARGARET BRENNAN: Which is why–
KUDLOW: And the president–
MARGARET BRENNAN: Which is–
KUDLOW: –is determined to defend it and change it.
MARGARET BRENNAN: –Which is why so many people support the idea of getting tough with China, but they’re worried that you’re actually going to damage American businesses. I’m looking at statements from the Retail Industry Leaders Association just on Friday: “Mr. President we implore you to end this trade war before the damage is irreversible.” National Retail Federation: “It’s impossible for businesses to plan for the future. How and where does this end?” Larry, this is the business community saying this. China hasn’t agreed to any concessions. Where does this end?
KUDLOW: Well, look, we- we’re in constant touch with all those business groups and, by the way, they’re also saying before something really bad happens, which I think is an implication nothing bad has really happened. I- I just want to disabuse so much of this recession talk out there. It just ain’t so.
MARGARET BRENNAN: Right, but businesses–
MARGARET BRENNAN: –you know have to plan–
MARGARET BRENNAN: –for the future–
KUDLOW: –business itself is doing very well–
MARGARET BRENNAN: –and confidence is a fragile thing, you know that. So, businesses are saying–
KUDLOW: Well that’s —
MARGARET BRENNAN: –they’re inhibited here.
KUDLOW: — that’s fair enough. But- but at the same time, truly, thousands and thousands of businesses have implored the president to protect them against China’s unfair trading practices and their IP theft, and their force technologies of transfers and their high tariffs. They have implored the president to take action. Look he’s the- he’s the first president in our memory, MARGARET, to go after these Chinese practices, which have done so much damage to the American economy and the rest of the world’s economy as well. He has to do it. He is going to continue to do it. Lower trade barriers would do great, great help to our economy to everybody large and small companies. We have our tax cut plan which gave the retailers and so forth great benefits, gave individuals and small businesses great benefits. And we are looking as I said earlier last week, there’s a tax cut 2.0 study going under my- under my aegis. We’re looking at something it’s not immediate. We’re not worried about a recession.
MARGARET BRENNAN: Well, so far, but as- as you heard the president said he was pulling back some because he was concerned it could be passed along to the consumer. Do you though based on what the president said again today, do you believe that the president does have the authority to block private businesses from investing in China?
KUDLOW: Well, look, ultimately he does have authority. It’s–
MARGARET BRENNAN: How would that work?
KUDLOW: –an emergency economic power authority. So, in theory that law exists, but that’s not what the president said. He’s asking American companies to take a look, take a fresh look at frankly moving out of China. Go in someplace else–
MARGARET BRENNAN: That takes years.
KUDLOW: –preferably coming home to America. It will take years. That is correct and that’s why there’s no immediate action here. He just put that out there. Look I’ve heard him say this time and time again the couple of years I’ve been working here, he said it to individual businesses, he said it to the big business groups, he’s asking them to come home. Come back home to America. We’re giving you low taxes and low regulations and an entrepreneurial environment. So in a sense this is nothing new. Maybe the way it was phrased was a little tougher than usual, but we- come home. Come home to America. This is the bass play- the best place to work and live and earn and invest.
MARGARET BRENNAN: Okay. So, to be clear, the president does not believe he can block private transactions with China?
KUDLOW: He is not intending to right now. That is not his intention.
MARGARET BRENNAN: But that is still something he’s thinking about?
KUDLOW: You know, I- I don’t even want to go down that road. It’s like first things first let’s look straight ahead. Straight ahead, I’m going to argue as I have, the consumer is booming, jobs are booming, wages are booming. Even savings is booming at the same time. This economy is strong
MARGARET BRENNAN: Alright. Larry Kudlow, always good to talk to you.
KUDLOW: Thank you, Margaret. Appreciate it.