Tags: larry kudlow | donald trump | economy | trade

Kudlow Takes a Spin on Trump's White House Merry-Go-Round

Kudlow Takes a Spin on Trump's White House Merry-Go-Round

By    |   Thursday, 15 March 2018 10:41 AM

In the merry-go-round of U.S. administration appointments, this weeks’ new head of the National Economic Council, which is the principal forum used by the president for considering economic policy matters, and which is separate from matters relating to domestic policy that are the domain of the Domestic Policy Council, which are both part of the Office of White House Policy, is Larry Kudlow, the economist and noted television presenter.

Kudlow was seen as a free trade advocate and has generally been pro-growth. Kudlow recently identified tariffs as being a regressive tax that would hit low-income Americans hardest.

However, investors may want to see Kudlow as being able to influence affairs before they cheer too wildly.

The U.S. President has considerable personal authority over trade, and so the influence of Kudlow or of any advisor on trade issues is only to go be relevant if they can convince the President of the validity of their arguments.

Kudlow has been a television host and former Bear Stearns & Co. chief economist, who grew up in New Jersey, and is seen as temperamentally and politically similar to the president. He’s also seen within the White House as having credibility on both Wall Street and in Washington, where he served as an adviser to President Ronald Reagan.

Yesterday on CNBC, Kudlow signaled that President Trump would support a strong dollar, pursue a second phase of his tax overhaul to make cuts permanent and take a tougher line on trade with China. He also backed off from previous criticism of Trump’s tariff plans on steel and aluminum imports and warned for potential new tariffs on European cars.

There is no doubt whatsoever that Larry Kudlow will have a completely different opinion from that of his predecessor Garry Cohn concerning the Federal Reserve’s monetary-policy approach.

Yesterday he commented on economic growth that is worth for investors to take note of: “Just let it rip, for heaven’s sake … The market’s going to take care of itself. The whole story’s going to take care of itself. The Fed’s going to do what it has to do, but I hope they don’t overdo it,” hereby making an apparent reference to the Federal Reserve’s announced moves to raise interest rates times this year, which under today’s circumstances could be 3 or 4 times.

Kudlow has once worked as a staff economist at the New York Fed.

Besides all that, today, the Bureau of Labor Statistics will release the U.S. import and export prices for the month of February which are going to be worth watching, especially from now on.

Companies whose exports to the United States are being taxed are faced with a choice:

  • They could lower the dollar price they charge to their customers, which in effect would treat the tax (tariff) in the same way they would treat a dollar decline in the foreign exchange markets, or
  • Alternatively, they could expect their customers to pay for the new tax (tariff).

The latter is a little more likely as the Trump tax (tariffs) on imports has a degree of permanence about it that, in comparison, moves in foreign exchange markets do not have.

If the number of trade taxes increases, then the importance of who pays the tax will become increasingly significant in economic terms.

Finally, the UK’s dispute with Russia over the use of chemical weapons on British soil may still be looked at by the financial markets as the real potential for more extensive economic sanctions persists.

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In the merry-go-round of the U.S. administration appointments, this weeks' new head of the U.S. National Economic Council (NEC), which is the principal forum used by the President of the United States for considering economic policy matters, and which is separate from...
larry kudlow, donald trump, economy, trade
Thursday, 15 March 2018 10:41 AM
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