The top economic adviser in the Trump Administrations says the U.S. will not back away from placing tariffs on Chinese products.
National Economic Council Director Larry Kudlow told business leaders at the Detroit Economic Club that China cannot sustain a trade war with the U.S.
China and the U.S. have imposed billions in retaliatory tariffs against each other over the past few months.
Some U.S. manufacturers fear the ongoing trade war could eventually shred corporate profits and force job cuts.
That could add to complaints over steel and aluminum tariffs, which the Ford Motor Company, for one, says could cost it about $1 billion in profits.
“We have the economic advantage right now,” Kudlow says. “People are disinvesting in China. We are in a boom and they know it. We are in a position to back up our actions. I’m not sure they can.”
Kudlow predicts the trade war might ease if President Trump meets with his Chinese counterpart at the G-20 summit in Argentina next month.
Beyond trade wars, Trump’s chief economic advisor says the Administration is questioning the role of welfare and disability payments in what Kudlow calls a surging economy.
Republican leaders have long sought to reign-in spending on entitlements, arguing it is the main driver of the federal debt.
But the tax cuts and other fiscal actions taken this year by Congress have the national debt soaring to the point where Senate Majority Leader Mitch McConnell recently lamented it could only be reduced if Democrats joined the GOP in raising the retirement age or making cuts in Social Security, Medicare and Medicaid.
Otherwise, Republicans argue, one political party making those painful cuts would leave it exposed to a huge backlash from voters.
Democrats are already using the historically-high federal debt as a campaign issue.
National Economic Council Director Kudlow says the Trump Administration will not go after those large entitlement programs, period.
Kudlow says the Administration has other spending targets in mind.
“We do have plans, however, to touch the smaller entitlements. Food stamps, welfare, disability,” Kudlow says. “You have the unemployment rate coming down, right? Sharply. But the folks on food stamps (number) about 40 million. How is that? Are they looking for work?”
Kudlow says the Administration hopes to tighten eligibility requirements so only those he says truly need government assistance will receive it.
He also notes the President wants a 5 percent reduction in funding for all government programs except defense spending and large entitlements.