WASHINGTON — President Donald Trump’s chief economic adviser said Sunday that American consumers would bear some pain from the escalating trade war with China, contradicting Trump’s claim that his tariffs are a multibillion-dollar, mostly one-way payment by China to the U.S. Treasury.
The comments from Larry Kudlow, the director of the National Economic Council, came after the 11th round of trade negotiations broke off without a deal, prompting Trump to raise tariffs on $200 billion worth of Chinese products and begin a process to impose levies on nearly every product China exports to the United States.
“In fact, both sides will pay,” Kudlow said on “Fox News Sunday.” “Both sides will suffer on this.”
Kudlow’s acknowledgment of economic pain, while widely shared by economists, contradicted the president’s view that trade wars are easy to win and that the burden falls disproportionately on America’s trading partners.
Both Kudlow and the president say a protracted trade war will ultimately be in the United States’ financial interest. Kudlow said that any pain would be worth the price if it forced China to treat U.S. companies more fairly.
“You’ve got to do what you got to do,” Kudlow said.
“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.”
Administration officials insist the trade talks have been constructive and say they will continue, possibly including a meeting next month between Trump and President Xi Jinping of China at the Group of 20 summit meeting next month in Osaka, Japan. But Trump has muddied that message with tweets suggesting he would be happy to leave tariffs in place indefinitely.
“There is absolutely no question that these tariffs, if imposed and sustained, increase the probability of a recession,” Rob Martin, a former Federal Reserve section chief who is now an executive director at UBS, said of a potential escalation. “It makes you more vulnerable.”