Why Trump Will Win the US China Trade War—Stephen Moore

can China really hurt the US with its financial weapons in the us-china trade war is the u.s. in a quote fantastic position as US President Donald Trump says is dumping US Treasury bonds really an option for the Chinese and how does all of this impact the 2020 election this is American thought-leaders and I'm Janiak Alec today we sit down with Heritage Foundation economist Stephen Moore who played a major role in the development of president Trump's economic policy and his co-author of the book Trump anomic s-- inside the America first plan to revive our economy Steve more wonderful to have you on American thought-leaders pleasure so you know these Chinese retaliatory terrorists have gone into effect on Monday and actually president Trump has been tweeting about it and I thought maybe you can give us a little bit of a breakdown I'll beat a little bit of what we got this morning first tweet he said China buys much less from us than we buy from them by almost 500 billion dollars so we are in a fantastic position and then he says we are the piggy bank that everyone wants to raid and take advantage of no more and the second piece is China will be pumping money into their system and probably reducing interest rates in order to make up for the business that they're losing if the Federal Reserve ever did a match it would be game over we win so Steve tell us what you think of all there's a lot there yeah let's start with the first part of yeah which is you know how this whole trade war and it's becoming it looks like it's becoming a trade war began and you know I know this all story because I've been in touch with my friends over at the White House who have been doing the negotiating right and the story hasn't really been told in the in the media which is that Trump and President Xi essentially had kind of a handshake deal about what this agreement was going to look like they've been working for a year and a half on it and then about 10 or 12 days ago the Chinese just backed off on it right on and they just said well we're not gonna go for that and Trump was infuriated and rightfully so they've been out doing all this negotiation you get down to the 1-inch yard line and then you can't get it over right it's like you know if you have a you and I have a chance deal and oh one more thing I want this or that I mean you can't negotiate under this term so China is clearly you know the power that actually initiated this trade conflict Trump will not back down and Trump basically said look if we have a deal you're going back on it I believe we're in a very abusive relationship with China right now Trump is right we've opened up our markets to them for 25 years they still 25 years later haven't opened up their markets to us I'm a free trade guy yes tariffs I hate I hate you know I love free trade but it's hard to have free trade frankly with the country that is stealing cheating lying involved in cyber espionage against the United States hacking into our computer systems they are an increasingly a menacing power that that is problematic for the United States to say the least and their change their behavior is going to have to change now my opinion is that we you know that and by the way Trump is sort of told me this it's you know let's say we have this tit-for-tat you know we're gonna have terrorists on you for this amount well we're gonna do that as Trump would say it sooner or later they run out of ammunition right because they don't they don't buy that much from us we buy six hundred billion dollars a year from them right and so I do think China's playing a dangerous game here it's gonna hurt both of our countries you know if we have a trade war we're already seeing in the stock market the effect of this consumers will pay it right but I do think Trump is using leverage and I think at the end of the day I'm actually fairly confident the Trump is gonna get a victory here the question is how long is this gonna take right so you know we are so we are we in a fantastic position just because of this trade deficit you know we're in a very solid position you know the way I like to put it and again Trump has said this kind of thing too if we can't trade with China we sneeze if they can't trade with us they catch pneumonia they have much more to lose than we do I mean if we can't trade with China when you go to Walmart you may have to pay 20 cents more for a tube of toothpaste or you know the clothing you buy is gonna blow right more expensive than that that will hurt consumers no question about it that's one of the benefits of free trade you get cheap things but if they can't trade with us if they can't sell us their stuff this cripples their economy right so and Trump wonders sans this look one thing you have to understand about Donald Trump because I've you know been around him now for four years he understand what makes him such a great negotiator he understands the concept of leverage right he understands right now at this point in time we have tremendous leverage over China that might not be the case five or ten years from now but right now we have the leverage and he's using it what do you make of this I noticed that one of the it's mostly agricultural things that are basically being targeted by the Chinese tariffs but there's also liquefied natural gas I don't even understand why they would sure why but yeah I have an interest I think there's an interesting point that's not been made in the media about what China is doing okay we've had a conversation this country for two-and-a-half years now about Russia meddling yeah an American election yes yeah and everybody's outraged and rightfully so we don't want foreign powers meddling in our elections what about China I mean this is a query clear-cut case where they're trying to meddle into our election by using tariffs as a election to to go after Trump voters yeah can't stand for that yeah whether you're Democrat Republican serving a liberal we can't have you know foreign powers you know trying to influence the outcome of our elections and that by the way Russia denied that they were influencing elections China is doing it openly brazenly right I mean so we can't stand for that right it's almost like they're using the the tariffs as sanctions of sorts exactly and and and really pinpointing those hurt have blue-collar and agricultural Trump voters and that's just I don't think that's ever really happened before in our history where a country is so brazenly tried to use trade tactics to influence an election it's pretty clear they don't like Donald Trump reelected right I mean Donald Trump is a very hard line guy with China they would love to have a Joe Biden or a Bernie Sanders or someone like that in the White House and and one of the things that actually makes me nervous and I think does weaken Trump's hand a little bit is you know China made believe Beijing may believe we can just wait this guy out you know right you know we can you know hurt the US economy hurt the US stock market then we got you know more pacifist Democrat in office that we can deal with and and that I think is is one flaw in Trump strategy is we just don't know whether what their pain threshold is in China right now because they are patient people the Chinese right and they also don't have to go elections democratic elections they don't by the way I believe that's an advantage that we have and but it but you know but for President Xi you know he can he can you know he doesn't care if you know a couple million Chinese are thrown out of work or something like that because he doesn't have to face those voters so what about the second part you know China will be pumping money into their system probably reducing interest rates I love Donald Trump and I think he's been pretty bright on the Fed I think you know one of the reasons he nominated for the Fed was that I agree with him that Fed has been too tight and I worried that you know we have actually had declining prices and that is suppressing the natural growth of the economy right you know we've shifted the supply of goods and services out through our tax cuts and our deregulation and when economy produces more goods and services that means prices fall now bright that the 300 PhD economist over there at the Fed they don't believe that they think just the opposite but they're wrong and so you know but in terms of Trump saying well somehow we can we can you know just switch the dial on interest rates and negate the impact of this trade war at I don't agree with that okay and by the way China can't protect their economy by you know influencing their currency either all they do when you weaken your currency all you're doing is basically sit hurting your own people right because it means the currency who owns the Chinese currency the kind of change Chinese people do so it would be like saying you know if a dollar bill in my pocket is now worth ninety cents and your dollar bill is worth ninety cents to are we better off of course not so China has been you said it twenty five years has been engaged in what we could call some kind economic aggression yeah or something not just a man increasingly a militaristic they're they become much more of a centrally planned totalitarian government I don't buy this idea China's gonna take over the world and they're gonna be the number one people and artificial intelligence and robotics and 3d image and you know the new bioengineering I'm gonna put my money on American entrepreneurs people in Silicon Valley in Austin Texas and you know when you have government directing your investment through a centrally planned economy the soviet-style systems show me any time where that's really worked so you know I love our way of doing and you know a more free market system so I don't buy this idea China's gonna overtake the world you know there's China 2025 program yeah they think Oh it'll be number one and robotics and artificial intelligence and all the engineering you know we'll see about that but you know the last 30 years almost every important invention in innovation has been made in America and China's copycatted that in the batter weight this is a big problem with China yeah they copycat everything we do which is fine but you got to pay for it right you got to pay for it so they don't pay for it absolutely well there's strategies called the stopped of intellectual property and it's a big problem so exactly so their strategy they couldn't innovate seemingly but they say ok well we'll just steal it yep right and and you know effect is the same we have to test why is that so some people probably wonder why is that such a big problem for America it's because increasingly what we do as Americans is intellectual property you know computer software you know innovation and product designs copyrights patents yeah new drugs new vaccines all of that stuff is intellectual property it's the stuff that you know comes from the human mind if they don't pay for it not only does that have hurt American you know companies but also reduces innovation because if people aren't gonna pay for it why would you invent it in the first place so it's a big problem that's Trump is spot on on this they're stealing by our estimates 300 billion not four hundred million three hundred billion dollars a year from our company right no and I heard that's even a low estimate I said we don't know exactly by the way another problem you know I talked to our negotiators China still denies they're doing it hey hey I think so let's say it China you know the first step in overcoming a problem you have to admit you have a problem they won't even admit it well so this is the thing that's been troubling me let's say China does blink let's say China you know signs a deal that's better for America than what's been blessed will happen but but how can we ever trust them to live up to that bargain that's the question I have and I'm talking about the Chinese kind of Astarte here so the answer to that is you can't trust them you can't trust them as far as you can spit I mean it's just true you know they have we had a deal with them one day and the next day they they don't have those kind of Western values that you and I shake hands you know a let's do a deal but they don't they don't believe in that kind of yeah so what is trumped on chunk knows that by the way so what he wants and this has been the hang-up in the negotiations he wants enforcement he wants what Reagan called trust but verify yes we you know you're gonna meet these metrics because we don't trust you based on your past behavior and you're gonna do x and y and z and if you don't do XY and z by such and such a date we're gonna hammer you with these tariffs again I don't like terrorists I hate terrorists but it's the billy club we're using to get them to behave you mentioned that this may take a bit of time you also mentioned that you think they were they will make a deal what do you have any sense of I think any project that's that yeah you know and this is speculation but but I look it's in both countries interest to get this done you know it really is if and by the way nothing that Donald Trump is asking for from the Chinese is unreasonable right nothing right I mean everything that he's they should be doing yes they should stop stealing yes they should open up their markets yes they should you know buy more of our products and so my bet is that before the end of this year or so um you know in the next five or six months we get a deal it's not gonna be a great deal you know because trying to only go so far but it'll improve things and I think Trump kind of conduct declare victory get reelected because that will be a spark for the economy and if economy is remaining strong like it is now chumps gonna win a big reelection and then you know my advice to Trump is then you use your second term to really hammer them because this isn't gonna be over in six months I mean you know it's gonna go on for years and years and years this is the epic battle this is the new Cold War in my opinion so you know she the the Chinese dictator he's been in a position where up until now there's been kind of unrestricted ability to take intellectual property basically no responses to these things this economic progression has been going on all of a sudden hey we got to put brakes on this this is what this is the new sheriff in town so you know purely based on that you know she I imagine as experiencing all sorts of resistance internally among his Politburo and so forth because well what why should we it's been a free-for-all for for so long all right this is yeah I mean look I don't know how our government operates I don't know how the decision-making is done yeah but I know this you know they're going to either have to start behaving look when we started this relationship you know back in the early 80s with China they were still a third world country you know and and we wanted to nurture them along we opened up the markets to them and that's how they grew now we're 25 years later and they still haven't opened up their markets to us and you know Americans by the way I would make the case that the China issue was one of the number-one issues for Trump you know he was the first presidential candidate the Bush's weren't tough on China Clinton wasn't tough on China Obama wasn't rough on China you know he's the first president who's basically said we have a problem here and you know what the American people get it you know people here in Washington DC may not get it but I guarantee you go to you repent Sylvania you go to Rockford Illinois you go to Flint Michigan those people understand you know what's going on with respect to these China trade abuses so you you mentioned that you know American consumers obviously will feel something because of this you know what what do you think the overall effect on the US economy is gonna be let's say this thing goes on there'll be not yours and it'll hurt Trump you know and you know again China will be hit three or four times harder than we will but it's a mutually assured destruction strategy and so you know I think the American people though are up for this you know I think most people are sophisticated and and understanding what's at stake here I mean by the way the worst possible outcome would be for Trump to stand out because that would only further embolden try not to abuse us right and I think some of my free trade friends and look I am a free trader let me say that loud and clear but I think they don't get that you know that that yeah we got to have free trade but it's hard to have a free trade regime and by the way the political consensus for free trade breaks down if you've got a country that's involved in such abusive behavior you know that's why I wrote this you know peace a few weeks ago basically saying you know that that even free traders should get behind Trump and this because it's a you know in the end of the day if Trump prevails we will have for your trade right will reduce our terrorists they'll reduce our terrorists and both countries will actually be better off so we discussed the impact on the American farmers and how that's a very targeted strategy on the Chinese side there's been people kind of mocking the president's idea of subsidizing some of these farmers to basically make it through this that the challenges being faced on them what do you what do you make of the subsidy concept you know I'm a little torn by that frankly yeah but I think at the end of the day you know they are targeting our farmers so we have to protect our farmers and I you know know in normal circumstances I don't ever think that governments never protect went into a steel industry or this industry or that our industry ah yeah but in this case it's a foreign act of aggression here and you know why not Trump's idea actually kind of makes sense we're gonna collect fifteen billion dollars of terrorists from them guess what we're gonna give that fifteen billion dollars from the Chinese to help our farmers to make sure that they don't fall victim to this Chinese aggression and you know so I think I could back it I don't I'm not entirely comfortable with it but you know we can't allow our Chinese our farmers to go bankrupt because in China is is targeting them so there's a Chinese newspaper state newspaper of course suggesting too that the government Chinese government could dump US Treasury Holdings and a you said tragedies argument China would only be hurting themselves they do that they don't a trillion dollars of our bonds all they're doing this cheapening on the bonds that they hold by the way there's no shortage in the world of people want to buy US Treasury bills if you notice the interest rates on Treasury bills today right yeah so come out that's the stupidest argument I've ever heard I hear a lot of Americans saying that oh we're vulnerable to China no it's the fact that why do you think they own Treasury bills because they know it's the safest investment in the world it's almost you know it's almost flattering the United States that they own so much of our debt and so the idea that somehow they're going to cripple our economy by selling the bonds they've already bought is ridiculous and they've they actually been buying fewer bonds and there hasn't been a shortage of people scooping them up so so this massive holding you know trillion dollar holding that it but you're saying if there's no threat to America Europe 0 fascinating now I'm not I would love to see you have a lower debt all right it doesn't matter who holds the debt well actually you know you were to by the way there's a like you know let's say you've got you know 25 really rich capitalists and China along you know three hundred billion dollars or a debt why don't we just like you know let him emigrate the United States become American citizens and guess what China doesn't own the debt anymore how do you like that idea well so I I remember you talking about great debt to GDP ratio being kind of the critical figure that it matters and maybe you can just break down how does how does that differ us to China and I don't know what their debt well they don't have nearly as much debt as we do because they have very high savings rates and we would be better off as a country or if we save more as a nation yeah but look I love our situation right now I mean my goodness think about this we've cut taxes we reduce regulation we've got a pro-business president we've got you know conservative pro-business people on the courts we have so massively increased the American capacity to produce output of goods and services I mean my goodness we have according to the latest jobs report something like 7.3 million more jobs than people that are filling them and if you even if you took every one of the six million unemployed people who are officially unemployed that means if we put every one of those people in a job we still have a million and a half jobs left over we've got a booming economy right now and this is the last piece of the puzzle in my opinion getting this China trade deal done in a way that America can stand proud we're China buys more of our products and we have a more level playing field in terms of our trade relationship well let's talk about the economy a little more broadly you've where you wrote the book Trump UNAM X of course right and and you were one of the architects are part architect certainly of the president's economic policy what do you think the growth projection is for this year well really hens a lot on this China and it's hard for me to say because I think you know a trade war with China could knock a percentage point off the GDP number so you know this is a big deal but I think we're on a good solid 3% growth path and you know if we if we settle this trade deal I think we could get to three and a half to four now whenever I'd be with with prods know that in Canada trompe l'oeil you know I say we think we can get you to three three nine four percent growth Trump is such an optimist I don't know if we can get to five but g-33 a half four percent remember in eight years in office not once in eight years did Barack Obama's to get us to three percent and come second year in office he got a three percent and by the way during the campaign Larry Summers and Paul Krugman and the New York Times editorial board and all these people they said Trump is lying the American people it's impossible to get the three percent growth and here we are right now with three percent growth so those people you know by the way those are the same people who said Trump's going to cause a second Great Depression right you know they're having a hard time explaining how the comic economy you know he's doing so well when when everything they said they were against the tax cuts they word against the deregulation they were against America you know pulling out of the idiotic you know Paris climate Accord all these things it's not one thing that Trump has done that's the thing I like to tell people if you said what's the most important thing Trump has done well I love the tax code I think it's been really important for our investment but it's just putting a pro-business pro America guy in the White House right you know I mean it makes a big difference when you replace a community organizer with someone who knows how to run a business yeah I remember just being stunned at the small business optimism index it's like kind of yeah exactly through the roof in it stayed high for two-and-a-half years now we've never seen in the history of the polling of that it was literally 48 hours after the election that number just went straight up I think I saw a number just the other day around 80% of small businesses we have 26 million small businesses are they there that kind of spinal-cord of our economy yeah 20 80 percent of them are optimistic yeah and this was just purely perception right after the election right exactly it's a big deal if you own a business remember what Trump I mean what Obama said you didn't build that I mean that's just an insult to people great business right whether they're corner grocery store or you know IBM and that kind of displays a an attitude about business in the Obama administration which was hostile they were hostile to business trumpets loves this you know clearly by the way you know you can't be pro worker and anti business you have to be pro-business and Pro worker and Trump is Pro worker and pro-business and so I think it's it's that emphasis on putting America first in every decision Nene makes that has unleashed it's like taking a champagne bottle on shaking it up and taking that cork off so for you is this China question sort of the biggest issue related to the economy in your mind is there something else that keeps you awake at night right now it's China clearly I do worry about a little bit about the fad I think they're a little too tight but you know I think Trump although I think his point is well-taken I think he exaggerated you know how important the Fed is I also worry about the global economy it's slowed down right so it that means you know what's happening now is the United States kind of carrying the rest of the world on our shoulders and that gets heavy after a while and that slows you down I mean we want these we want Japan to grow faster we want your up to grow faster while Canada grow to faster because then they can buy you know prosperity isn't a zero-sum game right so I do worry a little bit about the slowdown Japan's growing only one percent Europe's kind of flatlined China's growth rate is falling you know Trump's right we are the envy of the world right now in terms of our economy everybody's looking how we doing it you know what's happening here that's why you're seeing a Trump effect politically around the world now a kind of populist pro-worker pro-business capitalist you know free-market capitalist crusade which is a wonderful thing because this is the issue of our time it's socialism versus communism and right you know we have a whole party in the United States that is bet on the wrong model you know it's pretty scary really you mentioned Canada briefly and we have the u.s. MCA that's and you know being being looked at being you know oh yes me I know it's done so will that help Canada and Mexico yeah I like I I think the first NAFTA was it was very positive thing I disagree with Trump on that I mean he's got the worst trade deal in history you know look there was some problem was nothing for sure but you know from the time I was back in 93 I worked on NAFTA remember that was Reagan's vision you know that we'd make North America free trade continent I loved that vision we want to make sure there are no bees taking place right I think Trump has made some improvements to it Nancy Pelosi just bring the thing to a vote that's all we need bring this to a vote all these Democrats are complaining about Trump is all these you know the trade protectionist policies are hurting the economy okay you're for free trade bring up US Senate see him I'm CIA let us have just an up-or-down vote by the way if she allows that it will pass and that would be very positive for the economy you think it's possible that they just she just doesn't want to give the president a win gee that's a tough way of course she doesn't want it you know of course yeah I mean she's part of her look we don't have to like speculate here she says I'm the president of the resistance movement that means anything Trump wants to do they're just against it well it's good for the economy or not my goodness we passed the biggest tax cut for American families and American businesses in the history of this country and every single Democrat in the House and Senate voted against it and here we are two years later with the fruits of that tax cut which are evident to everyone and they the first thing they say if they take powers we're gonna get rid of the tax cut it doesn't sound like it makes a ton of sense and when you put it that way I mean you know and they are so beholden to this kind of class warfare idea you know in my opinion is you know of course we want the poor to do better you know by the way the wage data from The Wall Street Journal's a few weeks ago the biggest wage gains under Trump event for the lowest income workers how cool is that you know so we're actually lifting extremely cool this is what we wanted we wanted to lift the lower income and high you know Trump would I say look the rich can take care of themselves I mean he likes rich people he's rich himself but he wanted the whole idea was how do we pull up those people at the bottom ladder that's happening but the left feels like the way you do that is like just take money from rich people and giving it to poor people that doesn't work you know you got a you've got a creative help the economy so everybody has an opportunity to succeed and that's what's happening under Trump so what do you think given you know these different variables what do you think the outlook is for 2024 the president I mean if economy remains this strong I mean he's you know well when a about a 40 state you know landslide reelection I mean people don't vote against prosperity oh I mean you know they could run mother Teresa against dropping if we got a strong economy Trump is gonna win you know people in presidential elections which are very different elections than midterm election right midterms people vote on things like education health care or you know they feel good issues the environment what do people when their which is a president they look in my opinion two things how will they do how will they affect my pocketbook and my financial security and will they keep our nation safe now let's face it on Trump on both those issues Trump Trump's any Democrat that I can possibly think of Steve more wonderful to have you thank you for having me and I love epic times huh thank you you [Music]

Channel: American Thought Leaders - The Epoch Times

Views: 464,844

Rating: 4.1742368 out of 5

Keywords: trade war, US China, stock market news, Donald Trump, business news, China

Id: dFV0-ODvkmg

Length: 27min 46sec (1666 seconds)

Published: Wed May 15 2019