Trump’s Top Economic Adviser: ‘The Principal Culprit Is China’

US president and Chinese leader Xi will hold an official bilateral meeting in Buenos Aires, says Kudlow
November 1, 2018 Updated: November 1, 2018

WASHINGTON—The White House’s top economic adviser said on Nov. 1 that if China does not come up with a satisfactory offer to meet U.S. trade demands, then President Donald Trump will continue to aggressively pursue his agenda.

Larry Kudlow, director of the National Economic Council, admitted that the trade war created questions and anxieties among business owners. However, he defended the president by calling him a “free-trader” who wants to get rid of all tariff and non-tariff barriers.

“But we are stuck with a lot of foreign unfair trading practices, which have been harmful to the U.S. workforce and the economy,” he said at a Washington Post event on small businesses.

“Frankly, the principal culprit is China,” he said. “I think only they can break the logjam.”

The Trump administration presented Chinese officials with a list of more than 140 demands during the first round of trade talks in May. Washington’s demands included opening up China further to U.S. investments and abolishing the country’s foreign-ownership caps. The administration has also demanded China end its aggressive policies such as cyber theft, forced joint ventures, and intellectual theft.

This whole list is very important to the administration, Kudlow said.

“If they don’t make a satisfactory offer, then the president will continue to aggressively pursue his agenda. And I think he’s right to do so,” he added.

Kudlow believes China is getting isolated in the ongoing trade war, as the United States, Japan, and the European Union officials met in September in New York on the sidelines of the U.N. General Assembly and reached a deal to tackle China’s unfair trade practices.

That tripartite agreement, Kudlow said, was very important, as it laid out the brief against non-market economies, such as China.

During the meeting, the officials also agreed to reform World Trade Organization rules that are no longer effective to tackle practices that distort international trade.

Trump is planning to meet Chinese leader Xi Jinping at the Group of 20 (G20) summit in Buenos Aires later this month.

When asked about the goal of the meeting and whether both sides can end the trade war, Kudlow said: “My crystal ball is not at all clear.

“The agenda is being discussed and worked on in both camps. I think it will include trade, but I’m not 100 percent sure.”

It will be more than a sidelines meeting, he said, adding that both sides are considering a very formal, bilateral sit-down meeting that may include lunch or dinner.

The last round of trade talks with China ended in August with no concrete steps toward reaching a deal.

Trump said in a tweet on Nov. 1 that he had “a long and very good conversation” with Xi, offering some hope that trade tensions may cool after the G20 meeting.

“Just had a long and very good conversation with President Xi Jinping of China,” Trump wrote in a tweet. “We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina.”

Kudlow believes that an economic downturn in China will have “very modest effect” on the U.S. economy and small businesses. Despite tariffs, he said U.S. economic growth expanded in the last two quarters and was on track to hit the Administration’s 3 percent target for the full year.

When asked if small businesses should expect to see 3 percent growth again in 2019, Kudlow said, “Yes. Maybe higher.”

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