Top White House economist dismisses trade war fears

Top White House economist dismisses trade war fears
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The top White House economist on Thursday sought to tamp down fears of growing trade tensions between the U.S. and China and insisted that Trump administration officials are united behind the president’s agenda.

Kevin Hassett, chairman of the White House Council of Economic Advisers, told reporters that the importance of fighting for more fair trade terms with China shouldn’t be overshadowed by fears of economic harm triggered by retaliation.

“We need to move toward a world where trade barriers around the world come down, not just for us, but for our trading partners,” Hassett told reporters at a Washington, D.C., breakfast hosted by The Christian Science Monitor.

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"The objectives are sometimes lost as people think about what's the worst thing that could possibly happen.”

Hassett’s remarks come as a Treasury Secretary Steven MnuchinSteven Terner MnuchinUS, China reach limited trade deal ahead of tariff deadline Lawmakers strike spending deal to avert shutdown McConnell accuses Democrats of stonewalling funding talks with wall demands  MORE and U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerGOP senator warns quick vote on new NAFTA would be 'huge mistake' Pelosi casts doubt on USMCA deal in 2019 Pelosi sounds hopeful on new NAFTA deal despite tensions with White House MORE prepare for a trip to China to seek a way to ease trade tensions.

"I think China is very serious. We're very serious,” President TrumpDonald John TrumpSenate gears up for battle over witnesses in impeachment trial Vulnerable Democrats tout legislative wins, not impeachment Trump appears to set personal record for tweets in a day MORE said Tuesday at the White House as he announced the trip. “We've put on very substantial tariffs, and that will continue unless we make a trade deal. I think we've got a very good chance of making a deal.”

Trump has threatened to impose up to $150 billion in tariffs on Chinese imports to the U.S., prompting threats of retaliation from Beijing. While some of the tariffs include Trump’s levies on all imported steel and aluminum, other parts of the package are specifically targeted at China in what the president says is a response to years of intellectual property theft from U.S. companies.

While Hassett is not involved in trade negotiations, his 2018 White House economic report included extensive analysis of the harms caused to the U.S. economy. He said Thursday that Chinese theft of U.S intellectual property could cost the U.S. more than $100 billion a year by some estimates.

"If China is going to be the largest economy on Earth, then they need to start acting liking it,” Hassett said. “They need to start respecting things like intellectual property rules, not require people to joint venture to operate in the country and then transfer their technology to the Chinese company."

Hassett also rejected the notion that there were deep private divides among Trump’s economic advisers on trade policy.

Trump’s economic team is split between supporters of free trade — such as National Economic Council Director Larry Kudlow, who had spoken out against tariffs before joining the White House — and protectionists like Lighthizer and trade adviser Peter Navarro, who have supported strong levies on Chinese goods.

Kudlow’s predecessor, Gary CohnGary David CohnGary Cohn says he's 'concerned' no one is left in White House to stand up to Trump Trump says US will hit China with new round of tariffs next month Gary Cohn bemoans 'dramatic impact' of Trump tariffs MORE, left the White House earlier this year in opposition to Trump’s tariffs, and Mnuchin had reportedly urged the president to avoid tariffs.

Hassett insisted that the idea that “everything that everybody in the trade space wants to do is hated by a subset of the team is not accurate.”

“When we look at the asymmetries in the global trading structure, they're really notable and disturbing,” Hassett said. “The objectives are really worthy ones, and there are discussions and negotiations going on right now that I don't participate in and thus can't comment on, but everyone's hopeful that they'll reach a positive outcome."

Hassett also threw his support behind GOP efforts to cement individual tax cuts from last year’s overhaul that are set to expire at the end of 2025.

Republican senators have become nervous about voting on another tax package before the election, given the high toll the 2017 cuts are projected to have on the federal debt. But a tax-cut extension is a priority for House Speaker Paul RyanPaul Davis RyanJeffries blasts Trump for attack on Thunberg at impeachment hearing Live coverage: House panel debates articles of impeachment House Ethics Committee informs Duncan Hunter he can no longer vote after guilty plea MORE (R-Wis.), who is set to retire at the end of the year.

Hassett said he did not know when Congress would move on an extension, but said, "I know that the president thinks that it is a good idea and would celebrate it happening." He also said a conservative push to index the capital gains tax to inflation is a “worthy idea.”

"It's probably not nearly the big deal now that it was back when inflation was a really big number, but if a tax is supposed to be on real income, then we should index capital gains,” Hassett said.