On Monday’s broadcast of the Fox Business Network’s “Kudlow,” host Larry Kudlow said that he doesn’t really think using trade deficits to calculate tariffs is a good idea and that if the Trump administration gets tax cuts and deregulation, it will spark growth and “We will grow faster than almost anybody. Therefore, almost by definition, by growing faster than the rest of the world, we’re always going to have a trade deficit.”
While speaking with Treasury Secretary Scott Bessent, Kudlow said, “I don’t know if you heard Art Laffer in the prior interview, but Art doesn’t believe that the trade deficit should be a metric. I don’t really either. Mr. Secretary, if you get your tax cuts, and I guess you’re well on the way, you get your deregulation, these are all huge pro-growth items, okay, we will grow, we, the United States, will grow faster than Japan. We will grow faster than almost anybody. Therefore, almost by definition, by growing faster than the rest of the world, we’re always going to have a trade deficit. So, I don’t know why you’d want to use the trade deficit in a calculation for a reciprocal charge. I understand your point about non-tariff barriers, I get that. That’s why I would have chosen a handful of countries, I don’t know, maybe ten or a dozen countries, and really carefully pinpointed it. But to apply this to the whole world on the basis of trade deficits, is that really the best, in your judgment? You’ve been around a long time, you’ve looked at these, you’ve done analysis, is that really where we should be at?”
Bessent responded that the trade deficit is due to trade rules, the U.S. budget deficit, and the strength of the dollar and that the budget deficit is being brought under control and the administration wants a strong dollar.
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