April 13, 2025 • 27 mins
Former Trump senior economic advisor Stephen Moore talks to Clay about the tariffs, the market drama and President Trump’s economic endgame. Larry Kudlow, Fox Business host and former Director of the National Economic Council of the United States, talks to Clay about Trump’s trade strategy and his overall view of where the economy stands after one of Wall Street’s wildest weeks.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Team forty seven podcast is sponsored by Good Ranchers.
Speaker 2 (00:04):
Making the American Farm Strong Again.
Speaker 3 (00:08):
Team forty seven with Clay and Buck, starts now news
that is out there.
Speaker 1 (00:15):
Inflation softening down to two point four percent, the lowest
rate in four years. Prices actually went down point one
percent since the last reading. Trump has raised tariffs to
one hundred and forty five percent on China, and we
(00:35):
have a budget resolution that has passed the House two
sixteen to to fourteen, which will lead to a tax cut,
the Big Beautiful Bill as Trump is calling it. Also
will add more for border security many different moving parts.
Their stock market back down today after one of the
biggest days in the history of stock market rallies yesterday.
(00:59):
We will into that a bit more, but we bring
on now. We've been decided Buck and I did a
while back. As the tariff process has played itself out,
Let's bring on people with strong economic backgrounds to talk
with all of you. Yesterday we had our Laugher on
at the same time. Today we have on Stephen Moore,
President Trump's former senior economic advisor. He is right now
(01:24):
the co founder of Committee to Unleash Prosperity, and we
bring him in now and Steve and I appreciate you
making the time for us. You've been on. It's been
a couple of years since you were on with us
last What do you think from an economic perspective, the
millions of people listening to us right right now should
(01:44):
know about what President Trump is doing and its impact.
Speaker 2 (01:49):
Well, Kaie, thanks so much for having me. And by
the way, how cool is that you had our laugher
on the most famous economists in the world yesterday? Yeah,
not bad, that's pretty cool. Have to say that. He
and I wrote a piece in the Wall Street Journal
on Tuesday urging Trump to you know, let's just offer
these countries zero terrorists and see if you know they'll
(02:11):
lower their terrasts zero, we'd lower ours. And I think
that was the impetus for Trump putting this proposal on
the table, which I thought was fantastic. That you're right,
yesterday was the biggest point increase in the Dow Jones
in the history of the stock market. Now it's down today,
but it's not down nearly as much as it was
up yesterday. And then look, this is going to be
(02:33):
a top sea turvy market for the next number of
months until we get this settled. But I got to
tell you, having worked with Donald Trump and seen him
in action, upfront and personal, this guy is three steps
ahead of everybody else on the chessboard. He is a
master negotiator. He knows what he's doing. And in the end,
I think from my first advice to people, just now
(02:55):
would be a terrible time to sell. You never want
to sell, you know when stocks have been for falling.
That's violating the first rule of stock convesting. You want
to buy low and sell high. But sometimes people get panicked.
That's number one. Number two. I believe what Trump is
trying to do from an economics standpoint is his strategy
(03:18):
is to isolate the bad actor, the new Soviet Union
of the world, and that is China. China is a
country that is a national security and economic security threat
to the United States is I think they are to
the free world. And so what he's trying to do,
(03:39):
I think is unite the rest of the world against China,
a kind of decouple from them because because they are
such a threat. And I think that strategy can work.
But we're going to find out. We're going to really
see whether or who are friends and allies I are
and who are our enemies?
Speaker 4 (03:56):
Will?
Speaker 2 (03:57):
Where will Europe be? Will they stand with us? What
about Britain? Well, they stand with us? What about Japan?
What about Canada? We need to unite. Trump is the
guy to do it. But we'll see.
Speaker 1 (04:08):
Okay, so let's dive into this. You mentioned people who
own stocks right now, which is a huge percentage. Yeah,
huge percentage of our audience out there, either in pensions
four oh one k's or people buying it and selling
individual stocks. What would you tell people who are nervous, apprehensive,
maybe pay attention to stock prices only when they're really
(04:30):
kind of popping in one way or the other. How
should they handle emotional reactions to valuations on the stock
market from your perspective as a highly trained, highly successful economist.
Speaker 2 (04:45):
Well, I'm an economist. I'm not a financial analyst, and
sometimes sometimes economists are.
Speaker 4 (04:50):
Not great stock pickers are. The great greatest.
Speaker 2 (04:53):
Economists who ever lived was Milton Friedman, and he was terrible.
It's not investing, So yeah, I'll say that as a
prelude to But the advice I'm going to give to
your listeners is really pretty straightforward, and I think almost
every financial honest would agree with me. It's called stocks
for the long run. So in other words, if you're
(05:13):
investing for you know, for it returns five years from now,
ten years from now, twenty years from now, depending on
what your age is, you want to be in the
American stock market, it goes up. It goes up. Now,
that doesn't mean that you get these kind of downturns,
but the real rate of return of the US stock
market since the New York Stock Exchange opened its doors
is like seven percent. So what I'm saying is, if
(05:37):
you don't have to take your money out, if you're
not cash squeezed right now, keep it in the market
because it's going to do well over time. And again
I'm not saying a year from now, maybe you're from now,
it maybe a little bit lower. What I'm saying is
I feel very very strongly that three years from from now,
five years from now, you're going to get a nice
return on your money. And if anything, I'd be buying
(05:57):
stock right now, not selling it.
Speaker 1 (06:00):
Hey, let's go into China in particular, because this is
obviously now the focus. Based on the way the President
has responded with yesterday's news, he really has isolated China
tariffs up now to one hundred and forty five percent
on China. From your perspective, what does a fair economic
deal with China look like?
Speaker 2 (06:21):
Well, China cheats, They steal, They steal our intellectual property,
they steal our patents. It is a very predatory nation.
So I think we have to be very tough with China.
And and by the way, you're talking to a guy
who's a free trader. You know, I like free trade.
I'm not a big fan of tariff's. I agree with
(06:42):
eighty percent of what Trump is doing. I'm not a
huge fan of terrists. Only the only thing I would
fault Trump on is that I think we should you know,
why is he going after Canada and some of our allies.
We really have to focus on China, and that's I
think that's where he is right now. So uh that
that's that's the issue. I mean, come on, China's on
the verge of possibly invading Taiwan. They're building up their
(07:05):
military and in a very aggressive way. They don't They're tariffs
are three to four times higher than ours are. And
I want to make sure that your listeners understand this.
You know, I do a lot of I'm doing, like
the BBC, I do a lot of like media in
like Europe and Japan. You know, they're interested what Trump's
going to do, and they're so self and they're self righteous,
(07:27):
and they're they're like, why is Trump doing this? He's
starting a trade war? And I said, wait a minute,
what are you people talking about. We have the lowest
tariffs in the world. They're terrorists are higher than ours,
So how can they say we're starting a trade war.
Speaker 1 (07:42):
No, it's a fantastic question when we've been asking on
this program for some time. Okay, so you in general
are a free trader. There is a tension and it
certainly has been I think exposed to some degree between
say Elon Musk, who is more of a free trader
than not, and Peter and r who is very much
not a free trader. So here is the challenge, so
(08:04):
far as I can see it is you kind of
have a schism, for lack of a better way to
describe it. What Trump is advocating for, on one hand
is free trade, and yesterday, talking with Art Laugher, I
said free trade with Europe can make sense. Japan, South Korea,
so called good actors right. For lack of a better
way to describe it, then there are I think it's
fair to say bad actors in China would be the
(08:26):
most prominent and powerful among them. How do you balance
the free trade perspectives with a country that is not
committed to free trade and end up with a deal
that makes sense across the board from your perspective.
Speaker 2 (08:40):
Well, that's a great question, and I'm going to give
you a kind of historical parallel. You know, in the
nineteen thirties, you know, we were a pretty free trade country,
and we were trading with Japan. You know, We've almost
literally sold them the lead and the steel that they
used for the bombs that they dropped on Pearl Harbor.
So that was kind of a tough thing to do.
(09:00):
And so do we really want to do that again
with China? I say no, I think we need to
really be very cautious about China. I also like and
by the way, Trump has changed my mind a little
bit on this stuff because I've watched him in action.
I used to be like a unilateral free trader, we
should have low terrace, no matter what other countries do.
Speaker 4 (09:20):
I no longer believe that.
Speaker 2 (09:21):
I think Trump is right. That look, I like this
idea of reciprocity. If you're going to hit us, if
you're going to hit us in the nose with a
twenty percent terrap, you know what, We're going to hit
you in the nose. And if you keep it up,
you know we're going to ratchet it. I think at
the end of the day, I really believe this that
Trump is going to force these other countries to play
(09:42):
by the rules, create a level playing field that benefits everyone.
Speaker 1 (09:45):
Okay, we're talking with Stephen Moore, Trump economic advisor, very
successful economists. Let me ask you this question big picture.
I'm sure you remember this well. I was a young
guy at the time. But in the nineteen eighties, those
of us who remember the nineteen eighties, the idea was
Japan was going to buy up everything. Their economy was
on fire, they were growing like crazy, and there was
(10:08):
a great deal of fear about Japanese ownership of American assets.
Now forty years later, the japan economies around the same
size ish at least according to the stock market. Is
China somewhat like Japan, where you're going to see this
massive growth and then they're kind of going to run
into a wall now here. We know the demographics. China's
(10:29):
population is but likely begun to decline. You know, there
are also it's getting more expensive to make goods in China,
which is how as economies rise, the expectation of workers increases.
Do you see a parallel potentially between the rapid rise
that we saw with Japan and then the plateau with
what we have seen with China as well?
Speaker 2 (10:51):
Yeah, and even more so. Look, China is a centrally
planned economy that is run by their government. It is
run out of Beijing. One lesson of history. You're a
history historian, I am a bit too. One of the
most important lessons of economic history is that central planning
does not work right right, It does not work. It
(11:11):
didn't work for the Soviet Union, It's not going to
work for China. So China's economy will implode. And I'm
not saying it's going to happen next year, but it
will implode. It's going to happen because you know, we
have a free enterprise system where we let capital markets
and our small businessmen and women make the decisions. They
have the government making the decision.
Speaker 4 (11:28):
Who are you going to bet on?
Speaker 1 (11:30):
No? I agree Okay, so let me ask you this
last question. I appreciate the time. I know how busy
you are doing interviews all over the world. Who has
more short term pressure on them in a teara for
by your analysis, China or the United States? Whose economy
suffers more as we go back and forth to stare
each other down.
Speaker 2 (11:49):
Well there, Look, you know when we sneeze, China catches pneumonia,
they have to trade with us. If we if we
stopped at trading with China, it would hurt our economy,
but their economy would go into a great depression. That's
the leverage that we have over China. And Trump is
playing that card. But it's a complicated question because they
(12:09):
don't face elections. Yes, President ge what's going to stop him?
He may be willing to throw his economy and do
a depression. You know, luckily we are a democratic country
and so you know, our pain threshold is probably a
lot of less than theirs are because they're run by
a dictator, no doubt.
Speaker 1 (12:25):
Well, that's an interesting way of contemplating it. What I know,
I said last question, But what do you think Chairman
Z is hearing and thinking as this process plays out?
I think a lot of people can get into Trump's
mind and understand the United States perspective. What do you
think the China perspective is right now?
Speaker 2 (12:41):
I think they're scared. You know it's not being covered
by the media, but their market has fallen much more
than ours. Hass Yes, you know they're facing They are
facing a very very severe recession. So I think they're
freaked out right now. They don't know how to deal
with Trump. I think Trump is as the upper hand here,
and I'm going to bet on Trump in America, not China.
Speaker 1 (13:00):
Stephen Moore, I loved the editorial that you and Art
laugher pin for the Wall Street Journal. We appreciate you
coming on and thank Art again. I need to text
him to thank him for coming on yesterday. We appreciate
your expertise, and anytime you want to come on, let
us know.
Speaker 2 (13:14):
Okay, thanks so much. Take care.
Speaker 3 (13:16):
You're listening to Team forty seven with Clay and Buck Larry.
Speaker 1 (13:21):
We appreciate you coming on with us. This is the
third straight day I believe that we have had major
economic breakdowns in the second hour of the show, which
doesn't happen all the time. We had an Art Laugher
a couple of days ago at this time Stephen Moore yesterday,
please to be joined by you now. And so mister
Cudlow here, what would you say to this huge audience
(13:42):
out there that we should know as we sit here
on Friday and the trade war between the United States
and Canada. You know, in the in terms of like
a hockey fight, both sides have thrown down the gloves, right,
We've got the stare doown going on. The punches are
being thrown.
Speaker 4 (14:01):
Clay. It really is. It's if you're looking for a
trade war, I guess it's China US. The Canadian part
is pretty quiet right now. In fact, Canada and their
new prime minister what's his name, Mark Carney. I know
(14:22):
the guy. He's the central bankers. He want to do
a deal with Trump. He wants to do a deal.
So that's not the issue. But look what I think
you know. The major point here is Trump is waging
war and fighting back against unfair trading policies and rules
(14:44):
over the past many decades, probably have to go into
the mid to late nineties. And the key point is,
first of all, China was allowed most Favored Nations UH
and that meant that, you know, we could trade with
them without any legal constraints. And then they ended the
(15:09):
World Trade Organization WTO, and I believe the year two thousand,
all right, and so what did they do? They basically
had very high tariffs, much higher than ours. Okay, I
mean their average tariff rate was thirty forty percent United
States two and a half percent, two point seven percent.
(15:33):
That disadvantage to us was it?
Speaker 1 (15:35):
You know?
Speaker 4 (15:35):
That means we can't sell to them because their tariffs
are so high and they price out our goods. But
they loved to sell to us, and with cheap goods.
Their government, you know, it's a communist country. Their government
subsidizes all production and wages, so they keep the wages low.
(15:58):
They keep the production low because all government subsidies. So
they're selling cheap stuff to us, and we have virtually
no tariffs. We can't and we can't sell to them
because they have a high tariff, right, And what that did?
Their cheap goods, which went on for twenty five years,
did great damage to America's heartland manufacturing and automobiles and
(16:23):
steel and you know, you name it. And the results
show that, I mean, we lost hundreds of thousands of
factories closed, we lost jobs. So that had to stop,
all right. And the fact is also, you know, it's
not just China. For heaven's sakes. You go around the world.
(16:45):
You look at the EU high tariffs, and you know
what Trump calls correctly non tariff barriers, which means regulations
like they can't buy the European Union won't buy a
lot of our food because they have all kinds of
your regulations on food. Okay, so that's a non terra barrier.
(17:05):
Or for example, right now, our social media companies, our
faced in our in our techie companies, they're trying to
put a tax on any internet service companies. Okay, so
that you know that has to change. It's a it's
an unequal position, it's not a level playing field, and
(17:28):
it's done damage to our economy. Trump is exactly right here. Now.
It's a hard thing to do. I get that, Uh.
And I think his shock therapy a week ago or
ten days ago, UH did shocked at financial markets and
probably shocked a lot of ordinary folks. You know, wake
(17:49):
up call. The liberal media is trying to kill him
with it. I'm trying to defend them. All of the
bunch of people. I think he's doing the right and
and you know, the most recent point, yesterday, two days ago,
he declared a ninety day pause on the tariffs that
we would be charging other countries. He raised those charges,
(18:13):
but he did it because seventy seventy five countries came
to him and Scott Bestons, the Treasury Secretary, in Jamison Greer,
the trade representative, and said, no, we want to do business.
We don't want to pay these tariffs. We want to
do business. We want to level the playing field. We
(18:35):
want to make a deal. All right, And right now
there's a bunch of very hot deals on the front burner,
Vietnam and Taiwan and South Korea and India front burnt
Argentina is another one. Even the European Union talked about
(18:58):
zero tariffs on all goods. That won't be sufficient because
of their non tara perrys. But the point is they
came to us. They didn't go to China. They came
to us, and so Trump suspended his tariff charges, reciprocal
tariff charges, and we're gonna make deals. And it's a
very good thing.
Speaker 2 (19:17):
Not easy to do.
Speaker 4 (19:20):
You know, maybe it could have been handled a little better,
a little maybe a little more gradual, but I don't
really feel like second guessing. And Trump's a very good negotiator.
After that, you know, after that shock and awe, what
does he call it? Liberation Day? I mean, all these
countries came to us, all right, they didn't go to China.
(19:41):
What they want to deal with us?
Speaker 1 (19:43):
Talking to Larry Kudlow here, you can watch them on
Fox Business. I'll be on with him later this evening
in the Fox studios. What does a successful trade policy
with China look like?
Speaker 3 (19:54):
To you?
Speaker 1 (19:54):
Let's pretend you were a mediator. I know you're obviously
skewed in favor of the United States, but let's pretend
you were hired as a mediator. You're very knowledgeable economically,
and your job was to bring a solution to the
United States and China. What does fair trade policy with
China actually look like?
Speaker 4 (20:11):
If I were a China mediator, I'd probably resign and
look for another job. That's what I'd have to do.
Speaker 1 (20:21):
But what does a successful trade package look like in
terms of if we could finally get a resolution? What
would it look like? From your person?
Speaker 4 (20:29):
I was on the China trade team, YEP in the
first term. Okay, I spent two years, all right. Our
team leader was Robert Lighteheiser Bobler, who, by the way,
is a genius on this stuff. Steve Maushan then the
Treasury Secretary. He was handling the financial companies. I was
(20:55):
any Seed director. Wilbur Ross with Commerce Secretary. Wilber was
on show last night. He and I handled the commodity section.
We had a huge We spent almost two years. We
made a deal was you know, China Trade Deal Phase one,
and was signed in early January of twenty twenty, and
(21:18):
it included provisions to stop intellectual property sects, to allow
American companies to operate in China as American run companies,
not Chinese run companies, so the FCED technology transfer would
(21:39):
go away. Anyway, we did this whole deal, and they
did not implement any of them. And then, of course,
in January of twenty twenty, China already knew that they
were stuck with this COVID disease, this COVID virus, and
(22:00):
they tried to cover it up. And we learned in
the next there are always rumors, and we learned literally
in the next couple of weeks in January that China
was suffering from a countrywide virus, and then, of course
the rest is history. Now they say they didn't implement
the deal because of COVID. Okay, but COVID has been
(22:23):
gone for a couple of years and China has not
come back to the deal. So I'm saying to you,
it's always possible that we could go back and work
through commodities, financial companies, insurance companies, intellectual property sets, force
(22:44):
transfer of technology, American ownership, lower tariffs, get your tariffs
down along with all the non tariffayers. It's possible we
could go back and conduct a China deal, you know,
Phase two. All right, It's possible. It would look a
lot like Phase one. They'd have to change their laws,
(23:05):
which they never did. By the way, part of that
deal was stop producing the parts for pentanol and other drugs.
They promised they would do that. In dinner in Blennis
Aires in Argentina, I was there as a G twenty
meeting US China. The first question Trump asked she was
(23:26):
will you stop producing fentanyl? And would mind you put
a capital punishment on people producing fentanyl? And she without batting,
and I said, yes, we will do that. And of
course he lied through his teeth. Right. This was this
was in I don't know, probably late sometime in late
(23:48):
twenty nineteen.
Speaker 3 (23:49):
What do you see the nine?
Speaker 1 (23:51):
No, this is all right, all great detail. What do
you think we know kind of because you know Trump well,
we kind of have a sense how Trump is responding.
What do you think Chairman Z's advisors are telling him
right now in China? How much do you think they
are panicked about where we are right now? How would
you assess leverage negotiating ability here vis a the US
(24:15):
and China.
Speaker 4 (24:17):
Look, the reality in the economy is the United States
with a tariff of one hundred and forty five percent,
the United States is no longer a customer of cheap
China goods. Yep, period bull stop. Okay, that will ruin
(24:38):
an economy that's still reeling from a real estate collapse
bust that happened a couple of years ago and they
still haven't recovering.
Speaker 2 (24:50):
Now.
Speaker 4 (24:52):
The thing about she is he has economic advisors. By
the way, I knew some of them because we worked well,
and a couple of them were pretty good reformers on
my end. But she doesn't listen to them. You talk
to people as I have, who are still operating Americans
who are still operating in China, particularly the insurance industry,
(25:14):
which has a long history in China, American American owns. Okay,
they will tell you that she's inking is not just
the head of the Communist Party. He views himself as
as an emperor. As an emperor. They're running pictures and
clips of Mau say Tongue right now. I don't know
(25:34):
if you've seen any of this stuff. One of the
all time great killers in humanity. She thinks he's emperor,
all right, and he's running the show, and if you
don't do what he wants, you're out. And so I
think it's almost impossible at this point. They may be
brought to their knees on economic grounds. They still have
(25:56):
a very strong military. They're pouring money into the military,
as I'm sure you know you know. They they have
military exercises circling Taiwan the minute Pete Hegseth left after
his meetings in Taiwan. So the military side is very difficult,
and that goes along with the economic side. So I'm
(26:16):
not optimistic about this. But the point, here's the point,
we don't need them we don't need them, okay. I
know there's supply chains that have to be altered. I
get that. But Vietnam, which is a communist country, has
become an American ally and they want to make the
deal and they can produce the same goods that China did.
(26:39):
Malaysia the same story, Cambodia the same story, India the
same story, Korea the same story, Taiwan the same story.
It's not like transshipping anymore where China would use another
country to get around to terra. They're doing it themselves now.
They've grown up, their economies have grown up. So I
(27:00):
don't think we need them. And I think that she
has gotten boxed in. Trump completely out boxed him on this.
China has nowhere to turn now, I'm reading in the papers,
and she is going to Europe, okay, to try to
bring them on his side. They won't because they suffered
the same problem. China sends cheap goods, cheap cars, undercutting everybody.
(27:25):
Mercedes been into Europe and Europe is sick of it.
And Europe is talking about tariffs on China. Even Mexico.
All right, China us Mexico to transship well fentanyl for
one thing, but also automobile parts and so forth. Mexico
is slapping tariffs on China, so China can do and
(27:46):
go wherever they want, but right now they're at the
short end of the stick. Trump knows this right, and
he will cheap tightening the news around China. You watch,
you wait and see.
The Team forty seven podcast is sponsored by Good Ranchers.
Speaker 2 (00:04):
Making the American Farm Strong Again.
Speaker 3 (00:08):
Team forty seven with Clay and Buck, starts now news
that is out there.
Speaker 1 (00:15):
Inflation softening down to two point four percent, the lowest
rate in four years. Prices actually went down point one
percent since the last reading. Trump has raised tariffs to
one hundred and forty five percent on China, and we
(00:35):
have a budget resolution that has passed the House two
sixteen to to fourteen, which will lead to a tax cut,
the Big Beautiful Bill as Trump is calling it. Also
will add more for border security many different moving parts.
Their stock market back down today after one of the
biggest days in the history of stock market rallies yesterday.
(00:59):
We will into that a bit more, but we bring
on now. We've been decided Buck and I did a
while back. As the tariff process has played itself out,
Let's bring on people with strong economic backgrounds to talk
with all of you. Yesterday we had our Laugher on
at the same time. Today we have on Stephen Moore,
President Trump's former senior economic advisor. He is right now
(01:24):
the co founder of Committee to Unleash Prosperity, and we
bring him in now and Steve and I appreciate you
making the time for us. You've been on. It's been
a couple of years since you were on with us
last What do you think from an economic perspective, the
millions of people listening to us right right now should
(01:44):
know about what President Trump is doing and its impact.
Speaker 2 (01:49):
Well, Kaie, thanks so much for having me. And by
the way, how cool is that you had our laugher
on the most famous economists in the world yesterday? Yeah,
not bad, that's pretty cool. Have to say that. He
and I wrote a piece in the Wall Street Journal
on Tuesday urging Trump to you know, let's just offer
these countries zero terrorists and see if you know they'll
(02:11):
lower their terrasts zero, we'd lower ours. And I think
that was the impetus for Trump putting this proposal on
the table, which I thought was fantastic. That you're right,
yesterday was the biggest point increase in the Dow Jones
in the history of the stock market. Now it's down today,
but it's not down nearly as much as it was
up yesterday. And then look, this is going to be
(02:33):
a top sea turvy market for the next number of
months until we get this settled. But I got to
tell you, having worked with Donald Trump and seen him
in action, upfront and personal, this guy is three steps
ahead of everybody else on the chessboard. He is a
master negotiator. He knows what he's doing. And in the end,
I think from my first advice to people, just now
(02:55):
would be a terrible time to sell. You never want
to sell, you know when stocks have been for falling.
That's violating the first rule of stock convesting. You want
to buy low and sell high. But sometimes people get panicked.
That's number one. Number two. I believe what Trump is
trying to do from an economics standpoint is his strategy
(03:18):
is to isolate the bad actor, the new Soviet Union
of the world, and that is China. China is a
country that is a national security and economic security threat
to the United States is I think they are to
the free world. And so what he's trying to do,
(03:39):
I think is unite the rest of the world against China,
a kind of decouple from them because because they are
such a threat. And I think that strategy can work.
But we're going to find out. We're going to really
see whether or who are friends and allies I are
and who are our enemies?
Speaker 4 (03:56):
Will?
Speaker 2 (03:57):
Where will Europe be? Will they stand with us? What
about Britain? Well, they stand with us? What about Japan?
What about Canada? We need to unite. Trump is the
guy to do it. But we'll see.
Speaker 1 (04:08):
Okay, so let's dive into this. You mentioned people who
own stocks right now, which is a huge percentage. Yeah,
huge percentage of our audience out there, either in pensions
four oh one k's or people buying it and selling
individual stocks. What would you tell people who are nervous, apprehensive,
maybe pay attention to stock prices only when they're really
(04:30):
kind of popping in one way or the other. How
should they handle emotional reactions to valuations on the stock
market from your perspective as a highly trained, highly successful economist.
Speaker 2 (04:45):
Well, I'm an economist. I'm not a financial analyst, and
sometimes sometimes economists are.
Speaker 4 (04:50):
Not great stock pickers are. The great greatest.
Speaker 2 (04:53):
Economists who ever lived was Milton Friedman, and he was terrible.
It's not investing, So yeah, I'll say that as a
prelude to But the advice I'm going to give to
your listeners is really pretty straightforward, and I think almost
every financial honest would agree with me. It's called stocks
for the long run. So in other words, if you're
(05:13):
investing for you know, for it returns five years from now,
ten years from now, twenty years from now, depending on
what your age is, you want to be in the
American stock market, it goes up. It goes up. Now,
that doesn't mean that you get these kind of downturns,
but the real rate of return of the US stock
market since the New York Stock Exchange opened its doors
is like seven percent. So what I'm saying is, if
(05:37):
you don't have to take your money out, if you're
not cash squeezed right now, keep it in the market
because it's going to do well over time. And again
I'm not saying a year from now, maybe you're from now,
it maybe a little bit lower. What I'm saying is
I feel very very strongly that three years from from now,
five years from now, you're going to get a nice
return on your money. And if anything, I'd be buying
(05:57):
stock right now, not selling it.
Speaker 1 (06:00):
Hey, let's go into China in particular, because this is
obviously now the focus. Based on the way the President
has responded with yesterday's news, he really has isolated China
tariffs up now to one hundred and forty five percent
on China. From your perspective, what does a fair economic
deal with China look like?
Speaker 2 (06:21):
Well, China cheats, They steal, They steal our intellectual property,
they steal our patents. It is a very predatory nation.
So I think we have to be very tough with China.
And and by the way, you're talking to a guy
who's a free trader. You know, I like free trade.
I'm not a big fan of tariff's. I agree with
(06:42):
eighty percent of what Trump is doing. I'm not a
huge fan of terrists. Only the only thing I would
fault Trump on is that I think we should you know,
why is he going after Canada and some of our allies.
We really have to focus on China, and that's I
think that's where he is right now. So uh that
that's that's the issue. I mean, come on, China's on
the verge of possibly invading Taiwan. They're building up their
(07:05):
military and in a very aggressive way. They don't They're tariffs
are three to four times higher than ours are. And
I want to make sure that your listeners understand this.
You know, I do a lot of I'm doing, like
the BBC, I do a lot of like media in
like Europe and Japan. You know, they're interested what Trump's
going to do, and they're so self and they're self righteous,
(07:27):
and they're they're like, why is Trump doing this? He's
starting a trade war? And I said, wait a minute,
what are you people talking about. We have the lowest
tariffs in the world. They're terrorists are higher than ours,
So how can they say we're starting a trade war.
Speaker 1 (07:42):
No, it's a fantastic question when we've been asking on
this program for some time. Okay, so you in general
are a free trader. There is a tension and it
certainly has been I think exposed to some degree between
say Elon Musk, who is more of a free trader
than not, and Peter and r who is very much
not a free trader. So here is the challenge, so
(08:04):
far as I can see it is you kind of
have a schism, for lack of a better way to
describe it. What Trump is advocating for, on one hand
is free trade, and yesterday, talking with Art Laugher, I
said free trade with Europe can make sense. Japan, South Korea,
so called good actors right. For lack of a better
way to describe it, then there are I think it's
fair to say bad actors in China would be the
(08:26):
most prominent and powerful among them. How do you balance
the free trade perspectives with a country that is not
committed to free trade and end up with a deal
that makes sense across the board from your perspective.
Speaker 2 (08:40):
Well, that's a great question, and I'm going to give
you a kind of historical parallel. You know, in the
nineteen thirties, you know, we were a pretty free trade country,
and we were trading with Japan. You know, We've almost
literally sold them the lead and the steel that they
used for the bombs that they dropped on Pearl Harbor.
So that was kind of a tough thing to do.
(09:00):
And so do we really want to do that again
with China? I say no, I think we need to
really be very cautious about China. I also like and
by the way, Trump has changed my mind a little
bit on this stuff because I've watched him in action.
I used to be like a unilateral free trader, we
should have low terrace, no matter what other countries do.
Speaker 4 (09:20):
I no longer believe that.
Speaker 2 (09:21):
I think Trump is right. That look, I like this
idea of reciprocity. If you're going to hit us, if
you're going to hit us in the nose with a
twenty percent terrap, you know what, We're going to hit
you in the nose. And if you keep it up,
you know we're going to ratchet it. I think at
the end of the day, I really believe this that
Trump is going to force these other countries to play
(09:42):
by the rules, create a level playing field that benefits everyone.
Speaker 1 (09:45):
Okay, we're talking with Stephen Moore, Trump economic advisor, very
successful economists. Let me ask you this question big picture.
I'm sure you remember this well. I was a young
guy at the time. But in the nineteen eighties, those
of us who remember the nineteen eighties, the idea was
Japan was going to buy up everything. Their economy was
on fire, they were growing like crazy, and there was
(10:08):
a great deal of fear about Japanese ownership of American assets.
Now forty years later, the japan economies around the same
size ish at least according to the stock market. Is
China somewhat like Japan, where you're going to see this
massive growth and then they're kind of going to run
into a wall now here. We know the demographics. China's
(10:29):
population is but likely begun to decline. You know, there
are also it's getting more expensive to make goods in China,
which is how as economies rise, the expectation of workers increases.
Do you see a parallel potentially between the rapid rise
that we saw with Japan and then the plateau with
what we have seen with China as well?
Speaker 2 (10:51):
Yeah, and even more so. Look, China is a centrally
planned economy that is run by their government. It is
run out of Beijing. One lesson of history. You're a
history historian, I am a bit too. One of the
most important lessons of economic history is that central planning
does not work right right, It does not work. It
(11:11):
didn't work for the Soviet Union, It's not going to
work for China. So China's economy will implode. And I'm
not saying it's going to happen next year, but it
will implode. It's going to happen because you know, we
have a free enterprise system where we let capital markets
and our small businessmen and women make the decisions. They
have the government making the decision.
Speaker 4 (11:28):
Who are you going to bet on?
Speaker 1 (11:30):
No? I agree Okay, so let me ask you this
last question. I appreciate the time. I know how busy
you are doing interviews all over the world. Who has
more short term pressure on them in a teara for
by your analysis, China or the United States? Whose economy
suffers more as we go back and forth to stare
each other down.
Speaker 2 (11:49):
Well there, Look, you know when we sneeze, China catches pneumonia,
they have to trade with us. If we if we
stopped at trading with China, it would hurt our economy,
but their economy would go into a great depression. That's
the leverage that we have over China. And Trump is
playing that card. But it's a complicated question because they
(12:09):
don't face elections. Yes, President ge what's going to stop him?
He may be willing to throw his economy and do
a depression. You know, luckily we are a democratic country
and so you know, our pain threshold is probably a
lot of less than theirs are because they're run by
a dictator, no doubt.
Speaker 1 (12:25):
Well, that's an interesting way of contemplating it. What I know,
I said last question, But what do you think Chairman
Z is hearing and thinking as this process plays out?
I think a lot of people can get into Trump's
mind and understand the United States perspective. What do you
think the China perspective is right now?
Speaker 2 (12:41):
I think they're scared. You know it's not being covered
by the media, but their market has fallen much more
than ours. Hass Yes, you know they're facing They are
facing a very very severe recession. So I think they're
freaked out right now. They don't know how to deal
with Trump. I think Trump is as the upper hand here,
and I'm going to bet on Trump in America, not China.
Speaker 1 (13:00):
Stephen Moore, I loved the editorial that you and Art
laugher pin for the Wall Street Journal. We appreciate you
coming on and thank Art again. I need to text
him to thank him for coming on yesterday. We appreciate
your expertise, and anytime you want to come on, let
us know.
Speaker 2 (13:14):
Okay, thanks so much. Take care.
Speaker 3 (13:16):
You're listening to Team forty seven with Clay and Buck Larry.
Speaker 1 (13:21):
We appreciate you coming on with us. This is the
third straight day I believe that we have had major
economic breakdowns in the second hour of the show, which
doesn't happen all the time. We had an Art Laugher
a couple of days ago at this time Stephen Moore yesterday,
please to be joined by you now. And so mister
Cudlow here, what would you say to this huge audience
(13:42):
out there that we should know as we sit here
on Friday and the trade war between the United States
and Canada. You know, in the in terms of like
a hockey fight, both sides have thrown down the gloves, right,
We've got the stare doown going on. The punches are
being thrown.
Speaker 4 (14:01):
Clay. It really is. It's if you're looking for a
trade war, I guess it's China US. The Canadian part
is pretty quiet right now. In fact, Canada and their
new prime minister what's his name, Mark Carney. I know
(14:22):
the guy. He's the central bankers. He want to do
a deal with Trump. He wants to do a deal.
So that's not the issue. But look what I think
you know. The major point here is Trump is waging
war and fighting back against unfair trading policies and rules
(14:44):
over the past many decades, probably have to go into
the mid to late nineties. And the key point is,
first of all, China was allowed most Favored Nations UH
and that meant that, you know, we could trade with
them without any legal constraints. And then they ended the
(15:09):
World Trade Organization WTO, and I believe the year two thousand,
all right, and so what did they do? They basically
had very high tariffs, much higher than ours. Okay, I
mean their average tariff rate was thirty forty percent United
States two and a half percent, two point seven percent.
(15:33):
That disadvantage to us was it?
Speaker 1 (15:35):
You know?
Speaker 4 (15:35):
That means we can't sell to them because their tariffs
are so high and they price out our goods. But
they loved to sell to us, and with cheap goods.
Their government, you know, it's a communist country. Their government
subsidizes all production and wages, so they keep the wages low.
(15:58):
They keep the production low because all government subsidies. So
they're selling cheap stuff to us, and we have virtually
no tariffs. We can't and we can't sell to them
because they have a high tariff, right, And what that did?
Their cheap goods, which went on for twenty five years,
did great damage to America's heartland manufacturing and automobiles and
(16:23):
steel and you know, you name it. And the results
show that, I mean, we lost hundreds of thousands of
factories closed, we lost jobs. So that had to stop,
all right. And the fact is also, you know, it's
not just China. For heaven's sakes. You go around the world.
(16:45):
You look at the EU high tariffs, and you know
what Trump calls correctly non tariff barriers, which means regulations
like they can't buy the European Union won't buy a
lot of our food because they have all kinds of
your regulations on food. Okay, so that's a non terra barrier.
(17:05):
Or for example, right now, our social media companies, our
faced in our in our techie companies, they're trying to
put a tax on any internet service companies. Okay, so
that you know that has to change. It's a it's
an unequal position, it's not a level playing field, and
(17:28):
it's done damage to our economy. Trump is exactly right here. Now.
It's a hard thing to do. I get that, Uh.
And I think his shock therapy a week ago or
ten days ago, UH did shocked at financial markets and
probably shocked a lot of ordinary folks. You know, wake
(17:49):
up call. The liberal media is trying to kill him
with it. I'm trying to defend them. All of the
bunch of people. I think he's doing the right and
and you know, the most recent point, yesterday, two days ago,
he declared a ninety day pause on the tariffs that
we would be charging other countries. He raised those charges,
(18:13):
but he did it because seventy seventy five countries came
to him and Scott Bestons, the Treasury Secretary, in Jamison Greer,
the trade representative, and said, no, we want to do business.
We don't want to pay these tariffs. We want to
do business. We want to level the playing field. We
(18:35):
want to make a deal. All right, And right now
there's a bunch of very hot deals on the front burner,
Vietnam and Taiwan and South Korea and India front burnt
Argentina is another one. Even the European Union talked about
(18:58):
zero tariffs on all goods. That won't be sufficient because
of their non tara perrys. But the point is they
came to us. They didn't go to China. They came
to us, and so Trump suspended his tariff charges, reciprocal
tariff charges, and we're gonna make deals. And it's a
very good thing.
Speaker 2 (19:17):
Not easy to do.
Speaker 4 (19:20):
You know, maybe it could have been handled a little better,
a little maybe a little more gradual, but I don't
really feel like second guessing. And Trump's a very good negotiator.
After that, you know, after that shock and awe, what
does he call it? Liberation Day? I mean, all these
countries came to us, all right, they didn't go to China.
(19:41):
What they want to deal with us?
Speaker 1 (19:43):
Talking to Larry Kudlow here, you can watch them on
Fox Business. I'll be on with him later this evening
in the Fox studios. What does a successful trade policy
with China look like?
Speaker 3 (19:54):
To you?
Speaker 1 (19:54):
Let's pretend you were a mediator. I know you're obviously
skewed in favor of the United States, but let's pretend
you were hired as a mediator. You're very knowledgeable economically,
and your job was to bring a solution to the
United States and China. What does fair trade policy with
China actually look like?
Speaker 4 (20:11):
If I were a China mediator, I'd probably resign and
look for another job. That's what I'd have to do.
Speaker 1 (20:21):
But what does a successful trade package look like in
terms of if we could finally get a resolution? What
would it look like? From your person?
Speaker 4 (20:29):
I was on the China trade team, YEP in the
first term. Okay, I spent two years, all right. Our
team leader was Robert Lighteheiser Bobler, who, by the way,
is a genius on this stuff. Steve Maushan then the
Treasury Secretary. He was handling the financial companies. I was
(20:55):
any Seed director. Wilbur Ross with Commerce Secretary. Wilber was
on show last night. He and I handled the commodity section.
We had a huge We spent almost two years. We
made a deal was you know, China Trade Deal Phase one,
and was signed in early January of twenty twenty, and
(21:18):
it included provisions to stop intellectual property sects, to allow
American companies to operate in China as American run companies,
not Chinese run companies, so the FCED technology transfer would
(21:39):
go away. Anyway, we did this whole deal, and they
did not implement any of them. And then, of course,
in January of twenty twenty, China already knew that they
were stuck with this COVID disease, this COVID virus, and
(22:00):
they tried to cover it up. And we learned in
the next there are always rumors, and we learned literally
in the next couple of weeks in January that China
was suffering from a countrywide virus, and then, of course
the rest is history. Now they say they didn't implement
the deal because of COVID. Okay, but COVID has been
(22:23):
gone for a couple of years and China has not
come back to the deal. So I'm saying to you,
it's always possible that we could go back and work
through commodities, financial companies, insurance companies, intellectual property sets, force
(22:44):
transfer of technology, American ownership, lower tariffs, get your tariffs
down along with all the non tariffayers. It's possible we
could go back and conduct a China deal, you know,
Phase two. All right, It's possible. It would look a
lot like Phase one. They'd have to change their laws,
(23:05):
which they never did. By the way, part of that
deal was stop producing the parts for pentanol and other drugs.
They promised they would do that. In dinner in Blennis
Aires in Argentina, I was there as a G twenty
meeting US China. The first question Trump asked she was
(23:26):
will you stop producing fentanyl? And would mind you put
a capital punishment on people producing fentanyl? And she without batting,
and I said, yes, we will do that. And of
course he lied through his teeth. Right. This was this
was in I don't know, probably late sometime in late
(23:48):
twenty nineteen.
Speaker 3 (23:49):
What do you see the nine?
Speaker 1 (23:51):
No, this is all right, all great detail. What do
you think we know kind of because you know Trump well,
we kind of have a sense how Trump is responding.
What do you think Chairman Z's advisors are telling him
right now in China? How much do you think they
are panicked about where we are right now? How would
you assess leverage negotiating ability here vis a the US
(24:15):
and China.
Speaker 4 (24:17):
Look, the reality in the economy is the United States
with a tariff of one hundred and forty five percent,
the United States is no longer a customer of cheap
China goods. Yep, period bull stop. Okay, that will ruin
(24:38):
an economy that's still reeling from a real estate collapse
bust that happened a couple of years ago and they
still haven't recovering.
Speaker 2 (24:50):
Now.
Speaker 4 (24:52):
The thing about she is he has economic advisors. By
the way, I knew some of them because we worked well,
and a couple of them were pretty good reformers on
my end. But she doesn't listen to them. You talk
to people as I have, who are still operating Americans
who are still operating in China, particularly the insurance industry,
(25:14):
which has a long history in China, American American owns. Okay,
they will tell you that she's inking is not just
the head of the Communist Party. He views himself as
as an emperor. As an emperor. They're running pictures and
clips of Mau say Tongue right now. I don't know
(25:34):
if you've seen any of this stuff. One of the
all time great killers in humanity. She thinks he's emperor,
all right, and he's running the show, and if you
don't do what he wants, you're out. And so I
think it's almost impossible at this point. They may be
brought to their knees on economic grounds. They still have
(25:56):
a very strong military. They're pouring money into the military,
as I'm sure you know you know. They they have
military exercises circling Taiwan the minute Pete Hegseth left after
his meetings in Taiwan. So the military side is very difficult,
and that goes along with the economic side. So I'm
(26:16):
not optimistic about this. But the point, here's the point,
we don't need them we don't need them, okay. I
know there's supply chains that have to be altered. I
get that. But Vietnam, which is a communist country, has
become an American ally and they want to make the
deal and they can produce the same goods that China did.
(26:39):
Malaysia the same story, Cambodia the same story, India the
same story, Korea the same story, Taiwan the same story.
It's not like transshipping anymore where China would use another
country to get around to terra. They're doing it themselves now.
They've grown up, their economies have grown up. So I
(27:00):
don't think we need them. And I think that she
has gotten boxed in. Trump completely out boxed him on this.
China has nowhere to turn now, I'm reading in the papers,
and she is going to Europe, okay, to try to
bring them on his side. They won't because they suffered
the same problem. China sends cheap goods, cheap cars, undercutting everybody.
(27:25):
Mercedes been into Europe and Europe is sick of it.
And Europe is talking about tariffs on China. Even Mexico.
All right, China us Mexico to transship well fentanyl for
one thing, but also automobile parts and so forth. Mexico
is slapping tariffs on China, so China can do and
(27:46):
go wherever they want, but right now they're at the
short end of the stick. Trump knows this right, and
he will cheap tightening the news around China. You watch,
you wait and see.
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