Politics

Kudlow: GOP Will ‘Come Out Ahead’ in Midterms Despite Trade War Worries

Proposed tariffs could just be a bargaining chip for China talks, new Trump aide says

A woman with her daughter casts her vote in North Las Vegas on Election Day 2016. President Trump’s new top economic aide says Republicans will do fine in November if the economy remains strong. (Bill Clark/CQ Roll Call file photo)

Republican candidates will likely not be hindered by the tariff tit for tat between Donald Trump and China that some warn could start a global trade war as long as the U.S. economy remains strong, the president’s new chief economic adviser said Wednesday.

Lawrence Kudlow, a former Reagan aide who started last week, also suggested Trump’s proposed steel and aluminum tariffs could be little more than a move to get China to the negotiating table over its trade practices. And he suggested a U.S. trade deal with Canada and Mexico could be near.

“Everybody wants to solve this the best way they can,” Kudlow told Roll Call about the U.S.-China trade spat. “We don’t want to hurt businesses. We don’t want to hurt districts. We don’t want to hurt congressmen. And I think, at the end … of my mythical rainbow, they’re all going to come out ahead.”

“Look, I’m a contrarian on this. I work in the White House once every 35 years. What Ronald Reagan taught me 35 years ago is the key to politics is growth and the state of the economy,” he said. “And we are improving by leaps and bounds.”

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“So, therefore, I would suggest to you that the pundits who have written off the GOP in the House and [maybe] the Senate … are missing that if the economy is growing at 3 percent or better — and I believe it will because of the tax and regulatory reforms — the GOP is going to be much stronger in November than a lot of people think,” he said.

A recent Economist/YouGov survey gave Democrats a 7 point advantage in the generic ballot for the midterms. The RealClearPolitics average of recent generic ballot polls showed Republicans trailing by 7.2 points. (The Economist Group is the parent company of CQ Roll Call.)

Before the ongoing two-week congressional break, GOP members openly expressed concerns about Trump’s trade policies. But since scattering across the country, many have opted to remain silent about the latest U.S.-China tensions, even as Beijing’s moves would hurt their districts and states. Watch: Ryan Talks Mueller Investigation, Tariffs

Kudlow spoke to reporters in the executive mansion’s north driveway hours after the Chinese government on Wednesday said it would impose 25 percent tariffs on 106 U.S. products — including soybeans, automobiles, chemicals, beef, cotton and aircraft. The $50 billion in tariffs matches the proposed American duties on Chinese imports announced Tuesday by the Office of the United States Trade Representative.

Beijing’s possible moves would disproportionately hurt areas that broke for Trump in the 2016 presidential election, according to a new report by the liberal-leaning Brookings Institution. The only Hillary Clinton-supporting U.S. counties that would take a hit if Beijing implemented its import penalties would be the wine-producing ones, the think tank concluded.

Might Trump’s tariffs bluster be a mere bargaining chip — albeit a risky one —designed to get Chinese President Xi Jinping to the table?

“Yes, it’s possible. It’s part of the process,” Kudlow told reporters. “I mean, I would take the president seriously on this tariffs issue — there are carrots and sticks in life.”

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Calling Trump a “free trader,” Kudlow said the president “wants to solve this with the least amount of pain.”

“Here’s a key point: Both sides benefit by positive solutions that lower barriers and open markets,” he said. “This is a growth action. … Sometimes the path to this kind of growth is a little rocky. That’s the way the world works.”

GOP worries

Republican lawmakers’ are concerned that the GOP president could be triggering a global trade war that would likely hurt them at the ballot box in November. But Kudlow said this of a trade war: “Hopefully, we won’t get to that point.”

As to ongoing talks to negotiate the North American Free Trade Agreement, Kudlow said the three countries are “moving in the direction of a NAFTA deal.”

Many GOP lawmakers want the Trump administration to keep NAFTA in place, though they say the president is right to seek changes to get better terms for U.S. companies and workers.

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“I think we’re going to see some very positive news on NAFTA, and maintaining NAFTA, and reforming NAFTA,” Kudlow said. “And, heck, the stock market is going to love that.”

That comment came as U.S. and global markets were again down substantially Wednesday amid worries that Trump and the Chinese government are headed for a major trade conflict that would hinder the entire global economy.

U.S. soybeans were on the list of products targeted for tariffs that China released Wednesday, which drew pleas from industry leaders.

John Heisdorffer, the president of the American Soybean Association, called on the administration to withdraw the proposed tariffs on Chinese imports, adding that his members could lose their biggest export market amid the escalating trade skirmish. Heisdorffer said China’s threat to impose a 25 percent retaliatory tariff on soybeans shaved $1.7 billion in value from the 2018 crop.

Political blowback

At least one Democratic challenger was already criticizing leaders in the nation’s capital over the brewing trade war. Abby Finkenauer, a candidate in Iowa’s 1st District, tweeted Wednesday that Iowa families are “waking up worried about their future.”

“Our economy and livelihoods of so many of our fellow Iowans are at risk because of out of touch leadership in DC,” she said. “It’s shameful and we deserve better.”

Finkenauer is one of four Democrats vying to take on second-term GOP Rep. Rod Blum, who is a top target for Democrats in 2018. Trump carried his district in northeast Iowa by 4 points in 2016, although President Barack Obama won the district in 2008 and 2012. Inside Elections with Nathan L. Gonzales rates the race Tilts Republican.

Toula Vlahou, Ellyn Ferguson and Bridget Bowman contributed to this report.

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