Trade war will hurt China more, says top US economic adviser

White House economic director Larry Kudlow conceded American importers would pay more tariffs, which are a Customs duty on goods, but said Americans can avoid tariffs by buying from nations other than China.
White House economic director Larry Kudlow conceded American importers would pay more tariffs, which are a Customs duty on goods, but said Americans can avoid tariffs by buying from nations other than China.PHOTO: AGENCE FRANCE-PRESSE
White House economic director Larry Kudlow conceded American importers would pay more tariffs, which are a Customs duty on goods, but said Americans can avoid tariffs by buying from nations other than China.
WHITE HOUSE ECONOMIC DIRECTOR LARRY KUDLOW, on the impact of the trade war with China.

He also warns of consequences if Chinese spurn US request for Trump-Xi meeting

The trade war would hurt China more than the United States and would have a small impact on American consumers, said White House economic director Larry Kudlow in a counter to trade experts.

The United States is also waiting to hear from China on whether American President Donald Trump and Chinese President Xi Jinping will meet at the Group of 20 summit in two weeks' time, he said on Thursday.

"My President has indicated a strong desire to sit and meet. He's also indicated that if the meeting doesn't come to pass, there may be consequences. But he would prefer the meeting," said Mr Kudlow at an event by the Peterson Institute for International Economics (PIIE) in Washington.

Mr Kudlow's repeated defence of the Trump administration's strong-arm tactics indicate that it is unmoved by worries and criticisms over the trade war with China, which it believes it can win.

"The consumer impact will be very, very small, and the overall economic burden will hurt China more than it hurts us," he said.

"We can disagree about that but, from our standpoint, to protect America's economy... on a cost-benefit, it's worth it. We can't let the status quo continue the way it has continued because it has hurt us," he added.

"Leaders of both political parties in the US have accepted this for too long. Sometimes you have to get up there and kick some butt to make change. Change is hard," he said.

LITTLE IMPACT ON U.S. CONSUMERS

The consumer impact (on the United States) will be very, very small, and the overall economic burden will hurt China more than it hurts us.

WHITE HOUSE ECONOMIC DIRECTOR LARRY KUDLOW, on the impact of the trade war with China.

He conceded that American importers would pay more tariffs, which worked as a Customs duty on goods, in contrast to Mr Trump's repeated denials that both sides will suffer from the trade war and that US companies and consumers will be paying the tariffs.

Mr Kudlow said Americans could avoid tariffs by choosing to buy from countries other than China.

Moderator and PIIE founding director Fred Bergsten, however, said that buying goods from elsewhere could mean higher prices for Americans as other countries were less competitive and efficient. Retaliatory Chinese tariffs also hurt American exports.

"When you look at the policies taken together, they've hurt our exports and undermined that very important sector of the economy," said Dr Bergsten, reflecting a common view among US economists.

But Mr Kudlow's view - a hardening consensus shared by widening circles of the political elite - was that Washington "didn't start this" and had to take strong actions to put a halt to China's violations of international trade law.

Chinese bad behaviour, from theft of intellectual property to restrictions on foreign ownership of companies and cyber hacking, was impairing American enterprise, he said.

"If you had a level playing field, and this is the President's view, we'd have a massive surge of American exports to China, because we're so much more efficient than they are," said Mr Kudlow. "If China gives us an opening and quits breaking the law, we would do great."

But he voiced his scepticism that China would truly reform, citing the ongoing protests in Hong Kong over a proposed law allowing extradition to mainland China - which has been seen as Beijing encroaching on the city's autonomy - as an example of Chinese political repression.

"You ask if a government doing that can liberalise its economy... I don't know. But they are on the wrong side of history and we will win this battle," he said. SEE

BUSINESS

A version of this article appeared in the print edition of The Straits Times on June 15, 2019, with the headline 'Trade war will hurt China more, says top US economic adviser'. Print Edition | Subscribe