The National Economic Council director said at an event in Washington Thursday that the ongoing bilateral tit for tat will have minimal economic impacts on U.S. consumers.
The U.S.-China trade war will ultimately cause more economic damage to China than the U.S., and it will spur only “miniscule” consumer effects in the United States, National Economic Council Director Larry Kudlow said during an event at the Peterson Institute for International Economics on Thursday.
“Any consumer effects … I think will be very, very small,” Kudlow said.
Kudlow said he and White House Council of Economic Advisers Chairman Kevin Hassett have looked at the overall situation, and Kudlow said he believes the economic burden is going to shift to China, though he acknowledged “that remains to be seen.”
One potential indication that the trade war could inflict more economic pain on China than the U.S. is percentage of bilateral exports as a share of GDP.
China’s roughly $550 billion worth of yearly exports to the U.S. in 2017 accounted for about 4.5% of its GDP, while the United States’ roughly $110 billion worth of exports to China in 2017 accounted for only about 0.5% of its GDP.
“It’s a jolt, I get that,” Kudlow said, referring to Section 301 tariffs the U.S. has imposed on China. “Sometimes we have to jolt. That’s our point of view.”
He said there are tentative plans for President Donald Trump and Chinese President Xi Jinping to meet during the G20 summit in Osaka, Japan, June 28-29, although the meeting hasn’t been “formalized” yet.
U.S.-China trade talks have been essentially stalled since last month, and since then, Trump has threatened to increase tariffs from 10% to 25% across $200 billion worth of yearly imports from China and to impose new tariffs on essentially all U.S. imports from China not currently subject to Section 301 tariffs.
“From our standpoint, to protect America’s economy and its farmers, ranchers, autoworkers, manufacturing workers and so forth, as well as our technology patents and so forth, to do that on a cost-benefit basis, it’s worth it,” Kudlow said. “We can’t let the status quo continue the way it has continued.”