National Economic Council director Larry Kudlow defended new U.S. trade restrictions and sounded an upbeat note on the economy while speaking at CNBC and Institutional Investor’s Delivering Alpha Conference on Wednesday.
In an interview with Jim Cramer, Kudlow’s former co-host at CNBC, the Trump economic adviser argued that the president was doing “exactly the right thing” in raising tariffs on Chinese goods. Kudlow also professed his optimism surrounding the economy, predicting GDP growth of 4-5 percent in the U.S., and hinted that another round of tax cuts may be coming.
In defending Trump’s stance against China, Kudlow argued that “the world trade organization is broken” and that “the biggest culprit is China.”
Among other criticisms, Kudlow claimed the country’s policy of joint venture ownership with foreign companies enables it to “steal our intellectual property left and right.”
Chinese party leaders are “like mafioso dons,” he said. “You have to go and leave your entire blueprint on the table, including the technology. That’s wrong.”
The current trade situation — which Kudlow acknowledged has developed into a “significant trade dispute” — currently ranks among the biggest worries of fund managers. Sixty percent cited it as the largest tail risk facing the market in a poll conducted last week by Bank of America Merrill Lynch.
[II Deep Dive: Trade Worries Spike Among Fund Managers]
Although Kudlow emphasized that the U.S. economy remains in “very good shape,” he admitted that trade negotiations with China have stalled.
“In so far as we know President Xi [Jingping] at the moment does not wish to make a deal,” Kudlow said. “I’d love to be wrong about that.”
He added that Trump “sees himself as a free trader,” noting that the president advocated for a tariff-free system in meetings with other global leaders at the G7 Summit last month. In addition, Kudlow said the U.S. is having “very good talks” with Mexico regarding the North American Free Trade Agreement.
Referring to a New York Federal Reserve measure of the yield curve, he claimed that the risk of a recession through the next year is only 12.5 percent.
“There’s no recession in sight right now,” Kudlow said.
