He’s trying to avoid the collapse of NAFTA and a trade war with China by seeking consensus and sticking close to Trump.
Larry Kudlow thinks he can steer Donald Trump’s chaotic White House away from economic disaster by being the nicest guy in the West Wing.
Unlike Gary Cohn, his hard-charging predecessor at the helm of the National Economic Council, Kudlow doesn’t yell. He doesn’t have a reputation for knifing policy opponents in the press or badmouthing them to colleagues, as do many aides in the fractious administration.
“I have opinions, which I will share with the president,” Kudlow, an avowed free-trade supporter in a mostly protectionist White House, said in an interview Friday in his office on the second floor of the West Wing. “But I don’t keep people out of meetings. It’s not my style. So, I guess you might say I’m lower-keyed. I’m quite respectful of disagreements.”
Instead, he’s trying to avoid the collapse of the North American Free Trade Agreement and a bitter trade war with China — both of which could scramble the world’s economic power map — by seeking consensus with colleagues who are inclined to impose stricter trade barriers, staying close to his boss and wooing members of Congress.
Even Kudlow doesn’t know if it will work.
He spoke with POLITICO as U.S. Trade Representative Robert Lighthizer was locked in meetings with Mexican and Canadian counterparts on renegotiating NAFTA. The meetings produced no breakthroughs. The White House faces a May 17 deadline set by House Speaker Paul Ryan to submit a deal with the U.S.’ nearest neighbors to Congress.
A NAFTA collapse could send shock waves through markets, destabilize American supply chains and stifle the impact of Trump’s new tax cuts. Kudlow sounded less than optimistic that NAFTA will survive.
“I don’t know if we are going to get a deal. You are talking to the guy who is the optimist and the happy warrior, and as we meet now, I don’t know,” he said. “I don’t even want to go with the usual Kudlow optimist. I can’t go there.”
At the same time, the administration is also negotiating with China, which Trump has long argued takes advantage of the U.S. in trade. He has already slapped tariffs on imports of aluminum and steel, saying U.S. national security is at risk, and targeted thousands of other Chinese products for new trade barriers due to complaints about intellectual property theft. Kudlow was part of a recent U.S. delegation to Beijing for talks to resolve the standoff.
Trump’s communications about China have at times confused the negotiations. On Sunday, he tweeted that he was working directly with Chinese President Xi Jinping to “give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!”
It was not immediately clear what he meant or whether the effort could slow down the talks, which are precarious. Negotiations started out on a “very hostile” note, Kudlow said. He said it helped that one of the high-level Chinese trade negotiators recognized him from his years as a CNBC commentator.
With tricky trade dynamics to juggle on both sides of the globe, Kudlow’s style appears tailored to fit a president who does not care about the details of the policymaking process but values relationships and enjoys seeing his ideas vigorously defended on television. But Kudlow’s approach has left some critics complaining that he has abandoned other aspects of the NEC director role, though allies say he merely has a different style from Cohn’s.
Some staffers grumble that the rigorous policy process put in place by Cohn when he was NEC director is gone and that spending time with Trump and on TV is not sufficient to oversee the administration’s economic decision-making.
“Gary wanted to be at the center of coordinating and implementing policy,” said one former administration official. “Kudlow is OK at just being one voice in the room and seems more interested in outcomes than coordinating the process. But in this administration, you need some leadership and organization.”
Even people outside the White House who like and admire Kudlow say the NEC needs more hands-on management than he’s undertaken so far.
“Ninety five percent of the job is a grinding staff job, with sleeves rolled and managing a process,” said Tony Fratto, a former Treasury and White House official under George W. Bush who later founded the consulting firm Hamilton Place Strategies. “From here, it looks like Larry’s turned it into that mythical NEC director job where you spend 95 percent of your time with the president and talking about policy and telling people how it is.”
Kudlow acknowledges that maintaining proximity to Trump is central to how he does the job and that he is spending most of his time on trade, even though the NEC is also responsible for financial regulation, technology, energy, taxes and infrastructure, among other policy areas.
He said he’s taken that approach because the ultimate arbiter of the policymaking process is the president, not any senior staffer.
“No one controls the process about trade. We have a group of people, you know who they are. We meet with the president on a regular basis, often several times a week. Not the NEC nor any other group is going to control that process,” Kudlow said. “The guy who controls the process is the president.”
Some White House staffers say it’s not fair to criticize Kudlow for not managing a finely tuned policy process because, they say, Trump has very little economic policy beyond trade issues. Cohn’s tenure featured the giant tax cut bill, which required heavy coordination between the administration and Capitol Hill. But the president has not prioritized passing an infrastructure spending package this year or taken much personal interest in financial services legislation moving through Congress, meaning the trade talks have become the wonks’ main focus.
Free-trade supporters outside the White House — who fear Trump’s proposed steel and aluminum tariffs could deal a blow to the U.S. economy, particularly if no deal is reached with China — worry that Kudlow is moderating his trade views in order to stay in the president’s favor.
“It’s not enough to just do media and spend time with the president,” said one person close to the White House who supported Kudlow for the job. “You have to be able to manage a process that changes the president’s mind.”
Kudlow sharply rejected this criticism, saying he has not changed his views on tariffs or China. And he said what Trump is trying to do on trade is largely misunderstood.
“I’m opposed to blanket tariffs. And in general, I regard tariffs as a very blunt and difficult instrument,” Kudlow said. “On the other hand, I’ve never been opposed to targeted tariffs, and on China in particular, you can go back and look at Kudlow tapes and TV and God knows what, and I have been a hawk on China for years.”
He said the world generally agrees that China steals intellectual property and American technology while keeping up barriers to American products and services. The difference, he said, is that Trump is willing to do something about it.
“I don’t think I’ve changed my views at all,” he said. “I plead not guilty.”
Criticism aside, the free-trade business community can’t be too picky given its few defenders in this White House. Kudlow is “like the shining knight who can get them through this period of darkness,” said one Republican lobbyist.
Few expect Kudlow to steer the president (or Lighthizer) away from their protectionist impulses. But many in the business community hope that Kudlow can take what they view as rough edges off the administration’s trade policy, arguing if he can do that, his tenure will be a success.
They also hope that Kudlow could exert influence over the negotiations with China. That process is still at a nascent stage, unlike the NAFTA negotiations, which were well underway when Trump in March tapped Kudlow to take over the economic policy office.
“There’s still an enormous amount of discomfort with the administration’s trade policies, but I think Larry is providing an experienced voice, No. 1. And No. 2, he is working to make it a collegial process, which is very important,” said Joshua Bolten, CEO of the Business Roundtable and a White House chief of staff under George W. Bush. “That gives people greater confidence in the advice going to the president.”
One Republican congressional aide said that, so far, Kudlow has put lawmakers at ease with his gentlemanly style. He knows many of the older lawmakers from his days as an official in the Reagan White House. He got to know others on the Hill during the 2017 tax reform debate when he acted as a surrogate and advocate for the bill. He also helped write Trump’s tax framework during the 2016 campaign.
The main fears among Kudlow’s allies are that the pace of the job — traveling with and advising the president — will wear him out or that he’ll get weary of a White House known for backbiting.
One former administration official said any complaints about Kudlow are likely coming from staff members who are jealous of the amount of time the NEC director spends with the president.
“The president loves him and is always telling people what a good job he’s doing,” this person said. “He wants him in every meeting and asks for his opinions on things. He views him as a peer. The carping is just jealousy.”