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Trump's new economic adviser Kudlow sparks new trade war jitters
President Donald Trump's new chief economic adviser has triggered renewed concerns about a trade war by calling for the US to lead a coalition of nations to stand up to China.
Immediately after he was appointed by Trump overnight, Larry Kudlow, a 70-year-old former official in the Reagan administration, said that China had "earned a tough response not only from the United States".
He continued: "A thought that I have is the United States could lead a coalition of large trading partners and allies against China, or to let China know that they're breaking the rules left and right ... That's the way I'd like to see. You call it a sort of a trade coalition of the willing." Kudlow added, in the interview with CNBC, that he did not like blanket tariffs.
Trump made Kudlow director of the White House National Economic council on 14 March, replacing Gary Cohn, who stepped aside after Trump announced plans to impose tariffs on steel imports. Kudlow has also disagreed with Trump on his tariff plans, describing them as "a regressive tax on low-income families".
Kudlow, was an economist at Bear Stearns after leaving the Reagan White House and then, until his appointment by Trump, a pundit on CNBC and in other media. He left Bear Stearns in the mid-1990s to deal with addictions to cocaine and alcohol.
Writing in the Washington Post, Jared Bernstein, a former adviser to Barack Obama's vice president, Joe Biden, described Kudlow as "a die-hard, supply-side, trickle-down tax cutter" wedded to a strong dollar. But Bernstein said Kudlow was flexible enough to listen to opposing views on issues such as employment.
"He hated Trump's tariffs, though he eventually said something positive about sanctions on China for dumping steel. But any such conversions are new for Kudlow," Bernstein wrote. "Kudlow is a grown-up and will hopefully be someone who can get between Trump's worst instincts and the rest of us."
Others were more damning. Paul Krugman, the Nobel Prize winning Keynesian economist, said Kudlow was "reliably wrong about everything" and that Trump was looking for sycophancy instead of good advice.
Rabobank analyst Bas van Geffen said it could have been worse. "Markets may actually find some comfort in the fact that Mr. Trump decided to give the job to Kudlow, rather than someone with more radical economic beliefs, such as Peter Navarro, who is even more skeptical about the current free trade paradigm," he said in a note to clients.