Larry Kudlow: Trump's Trade Policy Rebalances Global Trade

Trump's Trade Reordering

• 💡 President Trump's trade policy is reordering global trade, with major economies like the EU and Japan making peace with his approach and avoiding a global trade war.
• 🎯 The strategy involves using America's economy as leverage, encouraging other countries to pay a modest toll of 15-20% to do business with the US.

Contrasting with Smoot-Hawley

• ⚠️ The current tariffs are contrasted with the Smoot-Hawley Tariff of 1930, which dramatically increased US average tariff rates to nearly 60%.
• 📉 The Smoot-Hawley Tariff triggered global retaliation and is seen as a major mistake during the Great Depression, unlike Trump's approach which has seen virtually no retaliation.
• 🧠 President Hoover's economic policies, including the Smoot-Hawley Tariff and a significant tax hike, are highlighted as mistakes that Trump is not repeating.

Trump's Economic Strategy

• 🚀 Trump is focused on cutting taxes and deregulating the economy to promote growth, a stark contrast to Hoover's policies.
• 💰 A clever aspect of Trump's strategy is persuading global economies and businesses to make huge direct investments into the United States, potentially totaling $5-6 trillion.
• 🤝 These investments are expected to offset the tariff effects and align with the low tax business incentives from the recently signed tax law.

Global Trade Diplomacy

• ✅ Trump has enlisted over half of the US's big trading partners, with successes in the EU and Japan providing momentum.
• 🌍 The question is posed: if tariffs are so bad, why are other countries using them, and if trade surpluses are bad, why are other countries pursuing them?
• 📈 Desirable goals include opening market access for US businesses and reducing foreign tariffs and non-tariff barriers.
• ⛽ Examples include selling more rice and cars to Japan, more cars to Europe, and selling liquid natural gas to Europe to reduce their dependence on Russian energy.
• 🌟 Trump is single-handedly revitalizing the world trading system, doing for it what it could not do for itself.