"FOX NEWS SUNDAY" ."
>> HELLO AGAIN AND HAPPY
MOTHER'S DAY FROM FOX NEWS IN
WASHINGTON.
PRESIDENT TRUMP SHOWS NO SIGNS
OF BACKING OFF HIS TRADE WAR
WITH CHINA AFTER NEGOTIATORS
FAILED TO STRIKE A DEAL.
ON FRIDAY HE MORE THAN DOUBLED
TARIFFS ON SOME 5,000 CATEGORIES
OF CHINESE PRODUCTS INCLUDING
FURNITURE, ELECTRONICS, AND
OTHER CONSUMER GOODS.
THE PRESIDENT IS THREATENING TO
IMPOSE TARIFFS ON ESSENTIALLY
ALL REMAINING IMPORTS FROM
CHINA, THAT'S ANOTHER
$300 BILLION OF PRODUCTS.
JOINING US NOW FOR AN EXCLUSIVE
INTERVIEW TO DISCUSS WHAT
HAPPENS NEXT, PRESIDENT TRUMP'S
TOP WHITE HOUSE ECONOMIC
ADVISOR, LARRY KUDLOW.
WELCOME BACK TO
"FOX NEWS SUNDAY."
>> Larry: THANK YOU, CHRIS,
APPRECIATED, HAPPY MOTHER'S DAY.
>> Chris: THANK YOU.
I'M NOT SURE WE SHOULD BE SAYING
HAPPY MOTHER'S DAY TO EACH OTHER
BUT I WILL TAKE IT.
I WANT TO START WITH SOMETHING
THAT YOU SET A COUPLE OF WEEKS
AGO WHEN YOU WERE PRETTY
OPTIMISTIC ABOUT A TRADE DEAL
WITH CHINA.
HERE YOU ARE.
>> I THINK WE ARE ON ABOUT THE -
>> I THINK WE ARE ON ABOUT THE A
>> I THINK WE ARE ON ABOUT THE D
>> I THINK WE ARE ON ABOUT THE L
>> I THINK WE ARE ON ABOUT THE N
>> I THINK WE ARE ON ABOUT THE E
>> I THINK WE ARE ON ABOUT THE .
MAYBE EVEN THE 5-YARD LINE
LOOKING INTO THE END ZONE.
>> Chris: WHAT YARD LINE ARE
WE ON NOW AND WHAT SET US BACK?
>> Larry: WE MAY STILL BE ON
THE FIVE OF THE SEVEN BUT AS I
SAID IN THAT CLIP, THOSE OF THE
TOUGHEST YARDS TO GET.
SO LOOK, THE SITUATION FOR US,
FROM OUR STANDPOINT, WE WERE
MOVING WELL, CONSTRUCTIVE TALKS
AND I STILL THINK THAT'S THE
CASE, WE ARE GOING TO CONTINUE
THE TALKS AS THE PRESIDENT
SUGGESTED IN HIS TWEET ON
FRIDAY, BUT THE PROBLEM IS TWO
WEEKS AGO IN CHINA THERE WAS
BACKTRACKING BY THE CHINESE AND
WE COVERED THE SAME GROUND THIS
PAST WEEK, AMBASSADOR LIGHT
HEISER AND SECRETARY STEVEN
MNUCHIN.
WE CAN'T FORGET THIS, THIS IS A
HUGE DEAL, BROAD OF SCOPE AND
SCALE OF ANYTHING THE TWO
COUNTRIES HAVE HAD BEFORE BUT WE
HAVE TO GET THROUGH A LOT OF
ISSUES FOR MANY YEARS CHINA
TRADE IT WAS UNFAIR,
NONRECIPROCAL, UNBALANCED, IN
MANY CASES UNLAWFUL.
SO WE HAVE TO CORRECT THOSE AND
ONE OF THE STICKING POINTS RIGHT
NOW AS WE WOULD LIKE TO SEE
THESE CORRECTIONS IN AN
AGREEMENT WHICH IS CODIFIED BY
LAW IN CHINA, NOT JUST THE STATE
COUNCIL ANNOUNCEMENT.
WE NEED TO SEE SOMETHING MUCH
CLEARER AND UNTIL WE DO WE HAVE
TO KEEP OUR TARIFFS ON, THAT'S
PART OF THE ENFORCEMENT PROCESS
AS FAR AS WE ARE CONCERNED OF
THE PRESIDENT HAS SAID THINGS
SEEM TO BE TAKING TOO LONG AND
WE CAN'T ACCEPT ANY
BACKTRACKING.
WE ARE REPRESENTING THE
UNITED STATES, ECONOMY, FARMERS,
AUTOWORKERS, MANUFACTURERS,
THESE ARE CRUCIAL PARTS OF THIS
DISCUSSION, SO WE WANT TO BE AS
SURE AS WE CAN BE, WE DON'T
THINK THE CHINESE HAVE COME FAR
ENOUGH.
WE WILL WAIT AND SEE, THE TALKS
WILL CONTINUE AND I WILL SAY
THIS, THE G20 MEETING IN JAPAN
TOWARD THE END OF JUNE NEXT
MONTH, THE CHANCES THAT
PRESIDENT TRUMP AND PRESIDENT XI
WILL GET TOGETHER AT THAT
MEETING ARE PROBABLY PRETTY GOO
GOOD.
>> Chris: SO HE POINTED OUT
THE PRESIDENTS TWEET ON FRIDAY
WHERE HE SEEMED PRETTY
CONCILIATORY.
IN FACT, THE STOCK MARKET, WHICH
I DROPPED DRAMATICALLY FRIDAY
WITH NEWS THAT THE TALKS, THE
NEGOTIATIONS HAD ENDED WITHOUT
ANY DEAL, ROSE ON THE KIND OF
CONCILIATORY OPTIMISTIC TONE
FROM THE PRESIDENT AND FROM THE
PROJECT ON MY TREASURY SECRETARY
STEPHEN MANAGING.
THE PRESIDENT WAS MUCH MORE
COMBATIVE IN A TWEET YESTERDAY.
I THINK THAT CHINA FELT THAT
THEY WERE BEING BEATEN SO BADLY
IN THE RECENT NEGOTIATIONS THAT
THEY MAY AS WELL WAIT AROUND FOR
THE NEXT ELECTION, 2022C IF THEY
COULD GET LUCKY AND HAVE A
DEMOCRAT WIN.
IF THE WILL BECOME FAR WORSE FOR
THEM IF IT HAS TO BE NEGOTIATED
IN MY SECOND TERM.
THAT'S A LOT TOUGHER THAN THE
PRESIDENT WAS TALKING ON FRIDAY,
HOW COME?
>> Larry: LOOK, THAT'S HIS
VIEW.
WE THINK SOMETIMES CHINA MAY BE
MISINTERPRETING THE U.S.
POLITICS.
I DON'T WANT TO GO DEEP INTO
THAT, BUT I THINK THERE'S ALWAYS
AN ISSUE THERE.
THE FUNDAMENTAL THINGS AND WE'VE
SAID THIS MANY TIMES,
INTELLECTUAL PROPERTY THEFT HAS
TO BE FIXED.
FORCED TECHNOLOGY TRANSFER AND
OWNERSHIP OF AMERICAN COMPANIES
HAS TO BE FIXED.
CYBER INTERVENTIONS HAVE TO BE
FIXED.
TARIFF AND NONTARIFF BARRIERS
HAVE TO BE FIXED AND THERE HAVE
TO BE VERY, VERY STRONG
ENFORCEMENT PROVISIONS.
SOME OF THE CHINESE OFFICIALS
HAVE SAID BOTH IN BEIJING AND
HERE THAT THE AGREEMENT WAS TO
UNBALANCED.
THE RELATIONSHIP HAS BEEN TO
UNBALANCED AND BECAUSE OF THESE
PROBLEMS OF UNFAIR AND SOMETIMES
UNLAWFUL TRADING PRACTICE, WE
HAVE TO HAVE A VERY STRONG
AGREEMENT TO CORRECT, TO RIGHT
THESE WRONGS BEFORE WE WOULD BE
SATISFIED.
>> Chris: I WANT TO GO THROUGH
A QUICK CHECKLIST AND I WANT YOU
QUICK ANSWERS HERE, LIKE A
LIGHTNING ROUND ON WHERE WE
STAND RIGHT NOW.
DO YOU EXPECT CHINA TO RETALIATE
FOR OUR INCREASE IN TARIFFS, AND
HOW SOON?
>> Larry: I THINK I DO, BUT
IT'S INTERESTING, THE EXPECTED
COUNTERMEASURES HAVE NOT YET
MATERIALIZED.
WE MAY KNOW MORE TODAY OR EVEN
THIS EVENING OR TOMORROW.
I RECKON THEY WILL.
WE WILL SEE WHAT THEY COME UP
WITH.
SO FAR WE HAVEN'T HEARD ON THAT
BASIS.
>> Chris: ARE NO TALKS -- AT
THIS POINT IT'S TALKS WILL
CONTINUE, OUR NEW TALKS
SCHEDULED WITH CHINA?
>> Larry: NOT YET, BUT THE
CHINESE HAVE INVITED THE
AMBASSADOR TO COME OVER TO
BEIJING, SECRETARY MINH NGUYEN
ALSO.
NO CONCRETE DEFINITE PLANS YET.
AND BY THE BY, LET ME REPEAT THE
STRONG POSSIBILITY THAT THE TWO
PRESIDENTS WILL MEET IN JAPAN AT
THE G20 MEETING.
>> Chris: HOW LONG BEFORE
PRESIDENT TRUMP MAKES GOOD ON
HIS THREAT TO IMPOSE 25% TARIFFS
ON ALL THE REST OF CHINESE
IMPORTS INTO THIS COUNTRY,
BASICALLY THE FINAL $300 BILLION
IN CHINESE GOODS?
>> Larry: WE'VE ALREADY
LAUNCHED THAT PROCESS UP ON THE
WEBSITE.
WHAT HAPPENS IN THIS IF I GET
THIS RIGHT, WE WILL HAVE
ANNOUNCEMENTS, WE WILL HAVE
HEARINGS, WE WILL HAVE PUBLIC
COMMENTS.
HOW LONG DOES IT TAKE?
I DON'T KNOW, IT COULD BE A
COUPLE OF MONTHS, THEREABOUTS.
>> Chris: THREE OR FOUR WEEKS,
BUT YOU'RE SAYING IT COULD TAKE
LONGER.
>> Larry: AMONG OTHER THINGS,
AS I UNDERSTAND IT, A 60 DAY
PUBLIC COMMENTARY OR SOMETHING
LIKE THAT.
CALL IT A COUPLE MONTHS, CALL AT
THREE MONTHS, I DON'T KNOW.
THE AMBASSADOR CAN DETAIL THAT.
BUT THAT WILL TAKE SOME TIME AND
THEN OF COURSE THE PRESIDENT IS
GOING TO HAVE TO MAKE THE FINAL
DECISION ON THAT.
>> Chris: LET'S TALK ABOUT WHO
PAYS, WHO PAYS FOR THE HIGHER
TARIFFS ON CHINESE IMPORTS.
HERE'S WHAT PRESIDENT TRUMP HAD
TO SAY THIS WEEK.
>> OUR COUNTRY CAN TAKE AND
$120 BILLION A YEAR IN TARIFFS,
PAID FOR MOSTLY BY CHINA, BY THE
WAY, NOT BIAS.
A LOT OF PEOPLE TRY TO STEER IT
IN A DIFFERENT DIRECTION.
WILLIE IS ULTIMATELY PAID FOR
LARGELY BY CHINA.
>> Chris: BUT LARRY, THAT
ISN'T TRUE.
IT'S NOT CHINA THAT PAYS
TARIFFS, IT'S THE AMERICAN
IMPORTERS, THE AMERICAN
COMPANIES THAT PAY WHAT IN
EFFECT IS A TAX INCREASE AND
OFTENTIMES PASSES IT ON TO U.S.
CONSUMERS.
>> Larry: FAIR ENOUGH.
IN FACT, BOTH SIDES WILL PAY.
BOTH SIDES WILL PAY IN THESE
THINGS.
>> Chris: BUT THE TARIFF ON
GOODS COMING INTO THE COUNTRY,
THE CHINESE AREN'T PAYING.
>> Larry: KNOW, BUT THE
CHINESE WILL SUFFER GDP LOSSES
AND SO FORTH WITH RESPECT TO A
DIMINISHING EXPORT MARKET AND
GOODS THAT THEY MAY NEED.
>> Chris: THE PRESIDENT SAYS
IF THEY DON'T PAY THE TARIFFS
THEY MAY SUFFER CONSEQUENCES BUT
IT'S U.S. BUSINESSES AND U.S.
CONSUMERS WHO PAY, COLLECT?
>> Larry: YES, TO SOME EXTENT.
I DON'T DISAGREE WITH THAT.
AGAIN, BOTH SIDES WILL SUFFER ON
THIS.
>> Chris: I WANT TO PICK UP ON
BOTH SIDES BECAUSE LET'S LOOK AT
ONE STUDY THAT PROJECTS WITH THE
COSTS ARE OF ALL U.S. TARIFFS.
LOOK AT THE SCREEN.
THIS STUDY FOUND THAT CURRENT
TARIFFS, ALL CURRENT TARIFFS
COST AN AVERAGE FAMILY OF $4767
A YEAR AND CUT U.S. EMPLOYMENT
BY MORE THAN 900,000 JOBS.
AND THE STUDY FOUND IF THE
PRESIDENT WERE TO IMPOSE THAT
25% TARIFFS EXTENDED ON ALL
CHINESE IMPORTS, INCLUDING THE
300 BILLION, PLUS THE COST OF
CHINESE RETALIATION, IT WILL
COST AN AMERICAN FAMILY OF
$42,200 A YEAR, CUT THE AMERICAN
EMPLOYMENT BY OVER 2 MILLION
JOBS AND CUT GDP GROWTH BY MORE
THAN 1%.
>> Larry: I WORK ON -- I THINK
THOSE ARE PRETTY WILDLY
EXAGGERATED NUMBERS.
I WOULD SUGGEST THAT IF YOU GO
THE WHOLE BOAT, 200 BILLION
INCREASE FROM TEN TO 25, PLUS
THE OTHER 300 BILLION, WE RECKON
IT WOULD BE ABOUT TWO TENTHS OF
1% OF GDP, SO IT'S A VERY MODEST
NUMBER.
WE HAVE A $20 TRILLION GDP.
IN TERMS OF POSSIBLE JOB LOSSES,
WE ARE WAY, WAY BELOW THAT
NUMBER AND I WANT TO NOTE HERE
THE UNITED STATES ECONOMY IS IN
A BOOM, THE NUMBERS ARE COMING
IN TERRIFIC, BETTER THAN ANYBODY
EXPECTED ON GROWTH, ON JOBS, ON
UNEMPLOYMENT, ON WAGES, ON
PRODUCTIVITY, WE ARE IN TERRIFIC
SHAPE.
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 I
WILL NOTE AS OTHERS HAVE, MAYBE
THIS IS PART OF YOUR LIGHTNING
ROUND BULLETS, MAYBE THE
TOUGHEST BURDENS ON FARMERS.
THE AGRICULTURE SECTOR, WE GET
THERE.
WE HELP TO THEM.
LOSS EXPERTS.
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.
>> Chris: ARE YOU READING
UPSIDE DOWN?
>> Larry: I'VE HAD SOME
EXPERIENCE.
WE WILL DO THAT.
IN A RISING ECONOMY WE ARE IN A
TERRIFIC AUSTERITY CYCLE BECAUSE
OF OUR POLICIES OF LOWER TAXES
AND DEREGULATION AND I MIGHT ADD
TRADE REFORMS.
WE WILL BE IN VERY GOOD SHAPE.
AND BY THE WAY, SOMETHING ELSE
THE PRESIDENT HAS SAID, LET ME
ADD THIS ON.
THE TARIFFS THEMSELVES ARE
PRODUCING A BIG INCREASE IN
CUSTOMS DUTIES, BIG INCREASE.
PERHAPS SOMETHING OF A MAGNITUDE
THIS PAST 12 MONTHS OF MAYBE
$25 BILLION THAT WILL HELP
FARMERS, THAT WILL HELP THE
TRANSITION.
YOU'VE GOT TO DO WHAT YOU GOT TO
DO.
WE HAVE HAD UNFAIR TRADING
PRACTICES ALL THESE YEARS AND SO
IN MY JUDGMENT, THE ECONOMIC
CONSEQUENCES ARE SO SMALL THAT
THE POSSIBLE IMPROVEMENT IN
TRADE AND EXPORTS AND OPEN
MARKETS FOR THE UNITED STATES,
THIS IS WORTHWHILE DOING.
>> Chris: OKAY.
THE LAST LINK -- I'M IN NO WAY
QUESTIONING THE WISDOM OF
DECIDING TO TAKE ON -- THERE'S
NO QUESTION THAT THIS HAS BEEN
AN UNEQUAL, UNFAIR RELATIONSHIP
IN TRADE BETWEEN U.S. AND CHINA.
THE LAST THING I WANT TO GET TO
IS THE QUESTION OF HOW
DETERMINED PRESIDENT TRUMP IS TO
SEE THIS THROUGH BECAUSE HE
CLEARLY HAD AN EXPECTATION.
IF YOU GOT TOUGH WITH CHINA ON
TARIFFS, THAT BASICALLY THEY
WERE GOING TO CAVE AND THERE WAS
GOING TO BE A DEAL AND
EVERYTHING WAS GOING TO BE GREAT
AND HE COME AS OPPOSED TO EVERY
OTHER PRESIDENT, WAS GOING TO
RESET THE RELATIONSHIP.
THAT IS NO LONGER SO CLEAR AND I
GUESS MY QUESTION IS HOW LONG
HAS PRESIDENT TRUMP PREPARED TO
WAGE THIS TRADE WAR WITH CHINA,
WHICH CLEARLY HAS COSTS TO THE
AMERICAN ECONOMY AND CONSUMERS
AND BUSINESSES?
>> Larry: I DON'T KNOW.
CAN I SUBSTITUTE TRADE
NEGOTIATION FOR TRADE WERE?
AFTER ALL, WE ARE TALKING, WE
WILL TALK SOME MORE.
>> Chris: UNDERSTAND BUT GIVE
TARIFFS ON THEN, WE HAVE TARIFFS
THEM.
VASTLY INCREASED.
IT'S NOT A NEGOTIATION.
>> Larry: IT IS A NEGOTIATION
AND PART OF THE NEGOTIATION IS
TAKING ACTION.
>> Chris: BUT ANSWER MY
QUESTION.
SINCE IT --
>> Larry: ONE THINGS I WANT.
ONE OF THE THINGS I'VE LEARNED
ON THE PRESIDENT TRUMP IS THAT
TARIFFS ARE PART OF NEGOTIATION
NEGOTIATIONS.
AND THEY SHOW THAT WE DO MEAN
BUSINESS AND WE WILL TAKE
ACTION.
CHRIS, AGAIN -- WE HAVE BEEN ON
THE WRONG SIDE --
>> Chris: ARE YOU -- OR HOW
LONG IS HE PREPARED TO CONTINUE
THIS EFFORT AND KEEP THESE
TARIFFS ON?
>> Larry: I WOULDN'T WANT TO
PUT A TIMETABLE ON IT.
I WOULD JUST SAY AS HE HAS
TWEETED AND HAS SAID TO US AND
SAID TO THE CHINESE, WE ARE
CONTINUING OUR DISCUSSIONS,
THAT'S A VERY GOOD THING.
NEGOTIATIONS YOU KNOW OVER TIME
STOP, GO, STOP, GO.
THE SPEED MAY BE PASSED TO MY
FAST WITH THE SPEED MAY BE SLOW.
THIS IS NOT AT ALL UNUSUAL.
>> Chris: ARE YOU SUGGESTING
THERE MIGHT BE A CERTAIN POINT
WHERE HE GOES THIS ISN'T WORTH
THE ECONOMIC COST AND POLITICAL
COST AND PULLS BACK?
>> Larry: I DON'T WANT TO
SECOND-GUESS THAT -- I DON'T
WANT TO PUT TIMETABLES, THAT'S
COMPLETELY UP TO THE PRESIDENT.
>> Chris: BUT YOU'RE NOT
PULLING IT OUT?
>> Larry: I THINK THE
ECONOMIC -- THE POTENTIAL
ECONOMIC GAINS OF A GOOD DEAL
THAT OPENS UP CHINA, MAKES THEM
LEGAL TRADE PARTNERS, THOSE
GAINS ARE HUGE, SO THAT'S A
COST-BENEFIT ANALYSIS THAT I
REALLY LIKE.
POLITICALLY I THINK THE COUNTRY
IS COMPLETELY BEHIND THE
PRESIDENT AND HIS TOUGH APPROACH
ON CHINA AND IN FACT AS YOU
KNOW, LEADING DEMOCRATS SUCH AS
SENATOR SCHUMER AND OTHERS HAVE
SUPPORTED THE PRESIDENT IN THIS
BATTLE.
I THINK -- SOMETIMES YOU CAN DO
THE RIGHT THING AND IN A SENSE,
THIS IS A BIPARTISAN POLICY AND
IT'S LONG OVERDUE.
SO LET ME REPEAT MY POINT --
>> Chris: WE DON'T HAVE TIME
FOR YOU TO REPEAT.
>> Larry: WORTH DOING, WE HAVE
TO CHANGE THE TRADING
RELATIONSHIP BETWEEN TWO
COUNTRIES FOR THE BENEFIT OF THE
UNITED STATES AND ITS WORKFORCE
AND ITS RANCHERS AND FARMERS AND
SO FORTH, WE HAVE TO DO THIS.
THE PRESIDENT IS SPOT ON.
>> Chris: LARRY, THANK YOU,
THANKS FOR YOUR TIME.
I MUST SAY I HOPE YOU ENJOY OUR
CONVERSATIONS AS MUCH AS I DO.