In the Oval Office on Tuesday, as fears of a trade war with China roiled markets and panicked U.S. farmers and lawmakers, Larry Kudlow, President Donald Trump’s new top economic adviser,...
“Very thankful for President Xi of China’s kind words on tariffs and automobile barriers,” Trump tweeted, referring to a trade speech that Xi had just delivered. “We will make great progress together!”
It was a sign of the early fingerprints of Kudlow, the Wall Street economist best known as a CNBC television personality who is now the director of the White House’s National Economic Council. Kudlow, barely two weeks into the job, casts himself as a “happy warrior” trying to give the best economic counsel he can to a president who has proved disinclined to follow advice.
“The way this has worked so far, we’ve been pretty close, but we have had differences,” Kudlow said of himself and the president during an interview in his West Wing office on Thursday. Asked what those were, he replied: “Oh, Lord ... I’m not sure I want you to know that.”
Kudlow said fears of a trade war were premature, a breakthrough on the long-stalled North American Free Trade Agreement was possible, a second tax-cut bill was under consideration by Trump, and a large infrastructure initiative was still a “big priority.”
His glass-half-full predictions were punctuated with talk of branding and “Kudlowisms,” terms he said he invents and tries to weave into the staff vernacular, like telling the press secretary to make a trade talking point “growthier.”
“This administration and its economic advisers, our goal here is growth — growth, growth, growth, growth — that’s the raison d'être of this administration on domestic policy,” Kudlow said. “We will rise and fall politically on that.”
It was Kudlow to whom Trump turned on Thursday in the Cabinet Room when he blurted out that he was willing to look at rejoining the Trans-Pacific Partnership, the sweeping Pacific Rim pact the president pulled out of upon taking office, shocking lawmakers and his own staff.
“Larry, will you get this done?” Kudlow said the president asked. Kudlow said he responded that if Trump did not mind, he would like to involve Robert Lighthizer, the U.S. trade representative whose job is to negotiate trade pacts.
Trump had asked Kudlow in the past whether he should explore rejoining the pact, he said, adding that he had always encouraged it. But the president’s decision to say so publicly on Thursday was entirely unplanned.
“There’s out of the blue, and there’s, I guess, out of the dark, navy blue,” Kudlow said. This, he said, was “dark, navy blue.”
But late Thursday, Trump appeared to reverse course again, tweeting that he would rejoin the pact only if the deal “were substantially better” than the one offered to President Barack Obama.
It was Kudlow who told the president Tuesday that he might want to consider publicly praising Xi’s speech, after days of aggressive rhetoric against China that included a threat of an additional $100 billion in tariffs, on top of the $50 billion already threatened, if China failed to change its trade practices.
At an impromptu meeting in the Oval Office, Trump seemed to like the idea, and John F. Kelly, the chief of staff, chimed in that he should do it by tweet, “for maximum impact,” Kudlow recalled. A round of “wordsmithing” ensued with Steven Mnuchin, the Treasury secretary, who was also on hand, and Kudlow said the result was significant.
“It was huge,” Kudlow said, “because now these two guys are, shall we say, communicating in a positive way.”
There is no evidence that either Xi’s speech or the presidential tweet has led to any substantive progress in averting the prospect of a tariff tit-for-tat that could have grave consequences for the United States. And Kudlow — a “free-market guy” who conceded he generally abhors the idea of tariffs — did not claim to have averted a trade war with his advice. But the episode seemed to suggest that Kudlow, at least for now, has the standing with Trump to exert his influence at crucial moments on the president’s message.
What is less clear is how he will affect policy.
“People are giving me ‘what-if’ scenarios where everything goes wrong and the sky falls, so the happy warrior says, ‘No, wait a minute,'” Kudlow said. “I’m not here to say we won’t have tariffs — everything’s on the table in these negotiations — but I am here to say we don’t know yet.”
Kudlow also did not pretend to know, from moment to moment, whether Trump’s rhetoric and behavior reflect a president winging it, or one playing out a grand strategy. “Honestly? I don’t know,” he said.
While he said he had read about tensions within the White House economics team, Kudlow dismissed them cheerfully as “pre-Kudlow.” His predecessor, Gary D. Cohn, a Democrat and former Goldman Sachs executive whom Trump and his supporters derisively branded a “globalist,” feuded with Peter Navarro, the director of the White House National Trade Council, and a longtime China skeptic.
Kudlow, a lifelong Republican who advised Trump’s presidential campaign and helped write his tax cut framework, said he got along well with Navarro, who was a frequent guest on his television program, even though they disagreed on some policy matters.
Kudlow said he had broken the ice with Navarro in a telephone call shortly after he had accepted his White House job.
“One of the first things I did was dial him up and say, ‘Peter, this is your pal, Larry,'” Kudlow said. “'Did I ever cut you off on the air?’ And he thought about it.”
Among Kudlow’s challenges is to keep a president who tends to stray off-script disciplined about promoting the effects of the tax cut enacted last year, which Republicans regard as their best hope of averting crushing losses in this year’s midterm elections.
Trump went rogue last week in West Virginia, tossing aside prepared remarks about the tax measure that he deemed “boring” and indulging in a lengthy rant against illegal immigration. But he stayed on message Thursday in the Rose Garden, with Kudlow looking on.
Kudlow said the president was open to a second round of tax cuts whose details were “not nailed down,” but could include making the personal income tax reductions and some business investment incentives permanent.
“The president looks on it favorably, but nothing’s coming to fruition,” said Kudlow, who added that he had not focused on the endeavor.
He was similarly vague about the infrastructure initiative, which has languished without a concerted campaign by the White House to make the case for it, and amid bipartisan concerns on Capitol Hill that the $200 billion Trump proposed over a decade is nowhere near sufficient.
“He’s very keen on it — very keen,” Kudlow said of the president’s view of the infrastructure plan. “Big priority here. And some people believe there could be a bipartisan deal.”
This article originally appeared in The New York Times.