- Chip Somodevilla/Getty Images
- The protectionist and free-trade sides of the Trump administration are once again clashing.
- Larry Kudlow, a free-trade economic adviser, criticized Peter Navarro, a protectionist member of the administration, during a televised interview.
- The cracks come as President Donald Trump is scheduled to hold talks with Chinese President Xi Jinping at the G20 summit at the end of the month – and as he is considering placing tariffs on imported cars and trucks.
- The fight between the free-trade and protectionist camps in the Trump administration contributed to the failure to complete a US-China trade deal in May.
Heading into a high-stakes bilateral discussion between President Donald Trump and Chinese President Xi Jinping, the US administration is missing a concrete, unified strategy to try to end the trade war while also extracting concessions from the Chinese.
Trump and Xi are set to meet in two weeks at the G20 summit in Argentina to try and strike a deal to lower tariffs on roughly $360 billion worth of goods flowing between the two countries. But two of Trump’s top trade advisers appear to be in different frames of mind about a potential deal.
On Tuesday, Larry Kudlow, Trump’s top economic adviser, criticized Peter Navarro, Trump’s ultra-protectionist trade adviser, during an appearance on CNBC. Kudlow took issue with Navarro’s comments that slammed Wall Street’s alleged involvement in US-China trade talks.
“If and when there is a deal, it will be on President Donald Trump’s terms – not Wall Street’s,” Navarro said. “If Wall Street is involved and continues to insinuate itself into these negotiations there will be a stench around any deal that is consummated.”
Asked about the comments, Kudlow offered a dismissal of his coworker’s words.
“Look, Peter Navarro is a friend of mine, truly. We’ve known each other for 20 years, but he was not speaking for the president, nor was he speaking for the administration,” Kudlow said. “His remarks were way off base. They were not authorized by anybody. I actually think he did the president a great disservice.”
Kudlow, a former CNBC host and Wall Street economist, said Navarro was wrong because Trump has been speaking to many interested parties – including Wall Street banks – to solicit input on the trade war with China.
“So I think Peter very badly misspoke,” Kudlow said. “He was freelancing, and he’s not representing the president or the administration.”
Kudlow’s dismissal of Navarro’s comments underlines the central tension between two sides of Trump’s economic team:
- On the one side is Kudlow and Treasury Secretary Steven Mnuchin, who have been cheerleaders for free trade and argued that Trump’s trade war with China is designed to ultimately facilitate more free trade around the world.
- On the other side is Navarro, US Trade Representative Robert Lighthizer, and – to an extent – Commerce Secretary Wilbur Ross, who all believe the administration needs to take a hard line with China. This side also has a key advantage: Trump has been a public advocate of tariffs and trade restrictions for decades.
The two sides squared off during the last high-stakes negotiations between China and the US in May. During those meetings in Beijing, Navarro and Mnuchin reportedly engaged in a shouting match that was overheard by Chinese officials. The rift apparently left Chinese negotiators confused and helped contribute to the failure to reach a deal.
Lower-level talks between China and the US have restarted, and Kudlow told CNBC that Trump and Xi recently spoke. But the G20 summit is the first face-to-face trade discussion between the two leaders since the trade war started in earnest. While analysts aren’t particularly hopeful that the two sides can come to an agreement during the meeting in Argentina, the cracks in Trump’s trade team could once again make any progress even more difficult.
In addition to the looming China talks, the two sides are also reportedly bickering over Trump’s desire to impose tariffs on imported cars and trucks. Navarro is reportedly encouraging Trump to move forward with the crackdown, but Mnuchin and Kudlow warn that the move would have devastating economic consequences.
A decision on that issue appears to be close, as Trump convened a meeting of his trade team to discuss the auto tariffs on Tuesday.