Trump’s top economic adviser says to stop worrying, there’s a ‘pot of gold’ at the end of the trade fight with China

Larry Kudlow Adam Jeffery/CNBC/NBCU Photo Bank

  • Larry Kudlow, President Donald Trump’s top economic adviser, told Fox Business that the brewing trade war with China would end in a “pot of gold.”
  • Kudlow also told reporters that China tariffs may not even go into effect as they are part of a negotiating tactic.
  • Economists worry the tariff tit-for-tat between China and the US could set off a trade war and lead to serious economic damage.

Larry Kudlow hasn’t been President Donald Trump’s top economic adviser for long, but the former CNBC host already finds himself in the middle of a crisis with China.

Kudlow urged caution on Wednesday after the US and China went back and forth with declarations of new tariffs. The increase in trade tensions worried many economists, who said the moves could be the start of a trade war.

“Don’t overreact, we’ll see how this works out,” Kudlow said in an appearance on Fox Business. “My view is, look, I’m a growth guy, I’m a Reagan supply-side growth guy. I think at the end of this whole process, the end of the rainbow, there’s a pot of gold.”

The US announced a list of 1,300 Chinese goods worth a total of $US50 billion that be subject to forthcoming tariffs on Tuesday and China responded with their own tariffs on $US50 billion worth of US goods Wednesday.

Kudlow said that at the end of talks with China, there would be stronger US economic growth, more trade, and higher wages in both the US and China.

Earlier in the day, Kudlow insisted to reporters that the tariffs on China may not even go into effect and were instead a tool to begin negotiations.

“You know, there are carrots and sticks in life, but he is ultimately a free trader,” Kudlow told reporters on the White House lawn. “He’s said that to me, he’s said it publicly. So he wants to solve this with the least amount of pain.”

While Kudlow, who took over from Gary Cohn as National Economic Council director last week, said the president understands that “lower barriers are good for growth,” Trump has repeatedly insisted on more tariffs and previewed multiple moves against China.

Most economists say the current trajectory of tit-for-tat tariffs between the US and China is a recipe for a trade war, which could lead to a recession in the US.

Watch Kudlow’s comments: