← The Clay Travis and Buck Sexton Show
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- [00:00]
Clay Travis
The Team 47 podcast is sponsored by Good ranchers making the American Farm strong again. Team 47 with Clay and Buck starts now. News that is out there. Inflation softening down to 2.4%, the lowest rate in four years. Prices actually went down 0.1% since the last reading. Trump has raised tariffs to 145% on China. And we have a budget resolution that has passed the House 216 to 214, 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 there. Stock market back down today after one of the biggest days in the history of stock market rallies. Yesterday we will dive 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 laffer on at the same time. Today we have on Stephen Moore, President Trump's former senior economic adviser. He is right now the co founder of Committee to Unleash Prosperity and we bring him in now. And Stephen, 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 now should know about what President Trump is doing and its impact.
- [01:49]
Stephen Moore
Well, Clay, thanks so much for having me. And by the way, how cool is that you had Art Laugharon, the most famous economist in the world yesterday?
- [01:57]
Clay Travis
Not bad. Kind of cool.
- [01:59]
Stephen Moore
That's pretty cool. And I 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 tariffs and see if, you know, they'll lower their terrorists to 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's the, 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 look, this is going to be a topsy 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 my first advice to people just now would be a terrible time to sell. You never want to sell, you know, in when stocks have been falling. That's violating the first rule of stock investing. 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 economic standpoint is his strategy 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, as I think they are to the. To the free world. And so what he's trying to do, 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 not who our friends and allies are and who are our enemies. Where will Europe be? Will they stand with us? What about Britain? Will they stand with us? What about Japan?
- [04:02]
Larry Kudlow
What?
- [04:02]
Stephen Moore
Canada? We need to unite. Trump is the guy to do it. But. But we'll see.
- [04:09]
Clay Travis
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, 401ks, or people buying and selling individual stocks. What would you tell people who are nervous, apprehensive, maybe pay attention to stock prices only when they're really 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?
- [04:45]
Stephen Moore
Well, I'm an economist. I'm not a financial analyst. And sometimes economists are not great stock pickers. One of the greatest economists who ever lived was Milton Friedman, and he was terrible at stock 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 analyst would agree with me. It's called stocks for the long run.
- [05:12]
Clay Travis
Yeah.
- [05:12]
Stephen Moore
So in other words, if you're investing for, you know, for returns five years from now, 10 years from now, 20 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 7%.
- [05:35]
Clay Travis
Yep.
- [05:35]
Stephen Moore
So what I'm saying is if 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 a year from now, it may be a little bit lower. What I'm saying is I feel very, very strongly that three years now, five years from now, you're going to get a nice return on your money. And if anything, I'd be buying stock right now, not selling it.
- [06:00]
Clay Travis
Okay, 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 145% on China. From your perspective, what does a fair economic deal with China look like?
- [06:21]
Stephen Moore
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 by the way, you're talking to a guy who's a free trader. I like free trade. I'm not a big fan of tariffs. I agree with 80% of what Trump is doing. I'm not a huge fan of terrorists. The only thing I would fault Trump on is that I think we should. 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 that's the issue. I mean, come on. China's on the verge of possibly invading Taiwan. They're building up their military in a very aggressive way. They don't, their 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 in what Trump's going to do. And they're so self, and they're self righteous 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. Their, their terrorists are higher than ours. So how can they say we're starting a trade war?
- [07:42]
Clay Travis
No, it's a fantastic question and one 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 Navarro, who is very much not a free trader. So here is the challenge so 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 Laffer, I said free trade with Europe can make sense. Japan, South Korea, so called good actors. Right. Lack of a better way to describe it.
- [08:23]
Larry Kudlow
Right.
- [08:23]
Clay Travis
Then there are, I think it's fair to say, bad actors. And China would be the 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?
- [08:40]
Stephen Moore
Well, that's a great question. And I'm going to give you a kind of historical parallel. You know, in the 1930s, you know, we were a pretty free trade country and we were trading with Japan. You know, we, we almost literally sold them the lead and the steel that they use for the bombs that they dropped on Pearl Harbor. So that was kind of a dumb thing to do. And so do we, 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 tariffs no matter what other countries do. I no longer that I think Trump is right, that look, I like this idea of reciprocity. If you're going to hit, if you're going to hit us in the nose with a 20% tariff, 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 by the rules, create a level playing field that benefits everyone.
- [09:46]
Clay Travis
Okay, we're talking with Stephen Moore, Trump economic adviser, very successful economist. 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 1980s, those of us who remember the 1980s, the idea was Japan was going to buy up everything. Their economy was on fire. They were growing like crazy. And there was a great deal of fear about Japanese ownership of American assets. Now, 40 years later, the Japan Economy's around the same size. Ish. At least according to the stock market. But is China somewhat like Japan where you're gonna see this massive growth and then they're kind of gonna run into a wall? Now here we know the demographics. China's population is likely gonna 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, which Japan, and then the plateau with what we have seen with China as well?
- [10:51]
Stephen Moore
Yeah, and even more so, look, China ha. 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 historian. I am a bit too. One of the most important lessons of economic history is that central planning does not work.
- [11:10]
Clay Travis
Right, right.
- [11:10]
Stephen Moore
It does not work. It 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. Who are you going to bet on?
- [11:30]
Clay Travis
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 tariff war, by your analysis, China or the United States, whose economy suffers more as we go back and forth each other down.
- [11:49]
Stephen Moore
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 don't face elections. Yes, President Xi, what's going to stop him? He may be willing to throw his economy into the depression. You know, luckily we are a democratic country. And so, you know, our pain threshold is probably a lot less than theirs are because they're run by a dictator, no doubt.
- [12:25]
Clay Travis
Well, that's an interesting way of contemplating it. What do 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.
- [12:41]
Stephen Moore
I think they're scared. You know, it's not being covered by the media, but their market has fallen much more than ours has. Yeah, you know, they're, 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 has the upper hand here and I'm going to bet on Trump in America, not China.
- [13:00]
Clay Travis
Stephen Moore, I loved the editorial that you and Art Laffer pinned 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.
- [13:14]
Stephen Moore
Okay, thanks so much. Take care.
- [13:17]
Clay Travis
You're listening to Team 47 with clay and Buck. Larry, 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 days ago at this time. Stephen Moore yesterday, pleased to be joined by you now. And so, Mr. Kudlow here, what would you say to this huge audience 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 hockey fight, both sides have thrown down the gloves. Right. We've got the stare down going on. The punches are being thrown.
- [14:00]
Larry Kudlow
Well, 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.
- [14:13]
Clay Travis
Right.
- [14:14]
Larry Kudlow
Canada and their new prime minister, what's his name? Mark Carney. I know the guy. He's the central banker. He's, he wants 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 over the past many decades. Probably have to go into the mid to late 90s. And the key point is, first of all, China was allowed most favored nations. And that meant that, you know, we could trade with them without any legal constraints. Then they entered the World Trade Organization, WTO, and I believe the year 2000. 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 30, 40%, United States, two and a half percent, 2.7%. That disadvantage to us was that, you know, that Means we can't sell to them because their tariffs are so high and they price out our goods, but they love 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. They keep the production low because all government subsidized. So they're selling cheap stuff to us. And we have virtually no tariff. We can't. And we can't sell to them because they have high tariffs. All right? And what that did, their cheap goods, which went on for 25 years, did great damage to America's heartland manufacturing and automobiles and 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, 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 crazy regulations on food. Okay? So that's a non tariff barrier. Or for example, right now our social media companies are 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 an, it's an unequal position. It's not a level playing field and it's done damage to our economy. Trump is exactly right here now. It's a hard thing to do. I get that. And I think his shock therapy a week ago or 10 days ago did shock the financial markets and probably shocked a lot of ordinary folks. You know, wake up call. The liberal media is trying to kill him with it. I'm trying to defend him along with a bunch of people. I think he's doing the right thing. And you know, the most recent point yesterday, two days ago, he declared a 90 day pause on the tariffs that we would be charging other countries. He raised those charges, but he did it because 70, 75 countries came to him and Scott Bessant, the Treasury Secretary, and Jameson 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 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 zero tariffs on all goods that won't be sufficient because of their non tariff barriers. 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 going to make deals and it's a very good thing, not easy to do. 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 is a very good negotiator after that, you know, after that shock and awe on what did he call it? Liberation Day. I mean, all these countries came to us, all right, they didn't go to China. They want to deal with us.
- [19:44]
Clay Travis
Talking to Larry Kudlow here. You can watch him 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 to you? 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?
- [20:12]
Larry Kudlow
If I were a China mediator, I'd probably resign and look for another job. That's what I'd have to do.
- [20:21]
Clay Travis
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 perspective?
- [20:30]
Larry Kudlow
I was on the China trade team in the first term. Okay. I spent two years, all right. Our team leader was Robert Lighthizer. Bob Lighthizer, who by the way, is a genius on this stuff. Steve Mnuchin, then the treasury secretary, he was handling the financial companies. I was NEC Director. Wilbur Ross was Commerce Secretary. Secretary Wilbur was on the 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 2020. And it included provisions to stop intellectual property theft to allow American companies to operate in China as American run companies, not Chinese run companies, so the forced technology transfer would go away. Anyway, we did this whole deal and they did not implement any of it. And then of course, In January of 2020, China already knew that they were stuck with this Covid disease, this COVID virus, and they tried to cover it up. And we learned in the next there are Always rumors. And we learned literally in the next couple 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 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 transfer of technology, American ownership, lower tariffs, get your tariffs down along with all the non tariff bearers. 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, which they never did, by the way. Part of that deal was stop producing the parts for fentanyl and other drugs. They promised they would do that in dinner in Buenos Aires, in Argentina. I was there. It's a G20 meeting, US China. The first question Trump asked Xi was, will you stop producing fentanyl and would mind you put a capital punishment on people producing fentanyl? And she, without batting an eye, said, yes, we will do that. And of course, he lied through his teeth. Right. This was in. This was in, I don't know, probably late sometime in late 2019. What do you think of 2019?
- [23:51]
Clay Travis
No, this is all, 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 advisers 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 vis US and China?
- [24:17]
Larry Kudlow
Look, the reality in the economy is the United States. With a tariff of 145%, the United States is no longer a customer of cheap China goods.
- [24:33]
Clay Travis
Yep.
- [24:33]
Larry Kudlow
Period, Full stop. Okay. That will ruin an economy that's still reeling from a real estate collapse bust that happened a couple years ago and they still haven't recovered. Now, the thing about she is he has economic advisors, by the way. I knew some of them because we worked well. A couple of them were pretty good reformers, I might add. But she doesn't listen to them. China, you talk to people, as I have, who are still operating, Americans who are still operating in China, particularly the insurance industry, which has a long history in China, American owned, okay. They will tell you that Xi Jinping is not just the head of the Communist Party. He views himself as an Emperor. As an emperor. They're running pictures and clips of Mao Chaitung right now. I don't know if you've seen any of this stuff. One of the, you know, all time great killers 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, I think it's almost impossible at this point. They may be brought to their knees on economic ground. They still have a very strong military. They're pouring money into the military, as I'm sure you know. You know, they had 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 not optimistic about this. But the player. 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. They want to make a deal, and they can produce the same goods that China did. Malaysia, the same story. Cambodia, the same story. India, the same story. Korea, the same story. Taiwan, the same story. It's not like trans shipping anymore, where China would use another country to get around the terror. They're doing it themselves now. They've grown up, their economies have grown up. So I don't think we need them. And I think that Xi has gotten boxed in. Trump completely outboxed him on this. China has nowhere to turn now. I'm reading in the papers Xi is going to Europe, okay, to try to bring them on his side. They won't because they suffer the same problem. China sends cheap goods, cheap cars, undercutting everybody, Mercedes Benz into Europe, and Europe is sick of it. And Europe is talking about tariffs on China, even Mexico. All right, China used Mexico to tranship well, fentanyl for one thing, but also automobile parts and so forth. Mexico is slapping tariffs on China so China can do and go wherever they want. But right now, they're at the short end of the stick. Trump knows this, right? And he will keep tightening the noose around China. You watch, you wait and see.