Larry Kudlow to Become Trump’s Chief Economic Adviser

Strong on tax cuts, deregulation and taking on China’s economic challenge with tough measures.

President Trump chose Larry Kudlow to serve as his top economic adviser, replacing Gary Cohn, the White House said Wednesday. “Larry Kudlow was offered, and accepted, the position of Assistant to the President for Economic Policy and Director of the National Economic Council,” Press Secretary Sarah Huckabee Sanders said in a statement. “We will work to have an orderly transition and will keep everyone posted on the timing of him officially assuming the role.” 

“I’m honored to take this position,” Mr. Kudlow said on CNBC, where he has appeared frequently as a senior contributor.

The Wall Street Journal, which has had its sharp differences with President Trump on such issues as trade, praised the Kudlow appointment.  “The long-time CNBC commentator is an excellent choice to replace Gary Cohn, having helped Mr. Trump craft his campaign tax plan. Mr. Kudlow, a stalwart from the GOP’s growth wing going back to the Reagan Administration, also played a crucial role persuading Congress to support the reform that passed in December.”

Mr. Kudlow, who had served in the Reagan administration as an economic adviser on budget policy, is a self-described Reagan conservative who believes in supply side economics. One of his close friends is Arthur Laffer, called by some “The Father of Supply Side Economics.” Arthur Laffer praised Mr. Kudlow as “a very sensitive man and a very logical man, which is exactly what Trump needs. And if by chance, he doesn’t convince the president of something, he will be a loyal employee. He stays loyal even if the decision goes against him.”

Larry Kudlow has wholeheartedly supported President Trump’s tax cut initiative. “Trump and the GOP are on the side of the growth angels with the passage of powerful tax-cut legislation to boost business investment, wages, and take-home family pay,” Mr. Kudlow wrote in a CNBC op-ed. “The Democrats, meanwhile, are left with stale class-warfare slogans about tax cuts for the rich.”

Larry Kudlow has also been on board with President Trump on other elements of his domestic policies. “He’s so good on deregulation, infrastructure. I even like him on immigration,” Mr. Kudlow said March 1st on CNBC. However, during the same appearance, Mr. Kudlow parted ways with the president on his tariffs announcement, which he called “a bad omen.” Mr. Kudlow added that, in his opinion, President Trump has “never been good on trade.“   

Larry Kudlow also wrote, along with Arthur Laffer and Stephen Moore, a March 3rd op-ed on CNBC’s site, claiming that while steel and aluminum may win in the short term, “steel and aluminum users and consumers will lose. In fact, tariff hikes are really tax hikes.”

Mr. Kudlow’s predecessor Gary Cohn, who was a strong believer in free trade and globalism, could not persuade the president to abandon his plan to impose tariffs on steel and aluminum imports. As a result, Mr. Cohn resigned his position. Not wanting to start out in the Trump administration on the wrong foot, Mr. Kudlow has more recently pulled back a bit from his opposition to President Trump’s tariffs decision. In a radio interview last Sunday, he tried to finesse the issue by chalking up President Trump’s tariffs announcement to the “Trumpian way of negotiating. You knock them in the teeth and get their attention. And then you kind of work out a deal, and I think that’s what he’s done. My hat’s off to him. He had me really worried. Now I’m not.”

As proof in his mind that President Trump is not simply pursuing a blanket protectionist policy for the steel and aluminum industries, Mr. Kudlow pointed out that Canada, Mexico, and Australia are already exempt. He predicted that European countries and our allies in Asia will also wind up being exempt. China could find itself the only major country not getting an exemption when all is said and done. 

In his first public interview since President Trump offered him the job Tuesday evening, Larry Kudlow focused his attention on China, a country that, he said, “has earned a tough response not only from the United States.” He emphasized that he was only against “blanket tariffs” because he didn’t think “you should punish your friends to try and punish your enemies in international affairs.“ 

Mr. Kudlow proposed “a sort of a trade coalition of the willing” to counter China’s economic pressure. “A thought that I have is the United States could lead a coalition of large trading partners and allies against China, or to let China know that they’re breaking the rules left and right,” he said. “That’s the way I’d like to see.”

President Trump likes such out-of-the-box thinking. “We don’t agree on everything, but in this case I think that’s good,” President Trump said on Tuesday before the official White House announcement of Larry Kudlow’s appointment. “I want to have different opinions. We agree on most. He now has come around to believing in tariffs as a negotiating point. I’m renegotiating trade deals and without tariffs we wouldn’t do nearly as well. But Larry has been a friend of mine for a long time. He backed me very early in the campaign; I think the earliest; I think he was one of my original backers. He’s a very, very talented man, a good man.”

Larry Kudlow will have to get through the security clearance process, which may be hampered somewhat by his acknowledged drug and alcohol addiction more than two decades ago. He said that he has been clean and sober for nearly 23 years and is willing to see how this issue plays out as a White House staff nominee.

Assuming he survives the security clearance process, Mr. Kudlow will have to then deal with the contending voices for the president’s ear, most notably that of National Trade Council Director Peter Navarro who is pro-tariff. Nevertheless, Peter Navarro and Larry Kudlow may well find common ground in dealing with the economic challenges that China presents to the United States and its allies. The quality of economic advice that President Trump will be receiving, including on trade issues, will be enhanced by Larry Kudlow’s presence on the president’s economic team.