Hilton West Palm Beach
West Palm Beach, Florida
12:20 P.M. EDT
MR. KUDLOW: I’ll just say to start, before we take some questions, this is a very important meeting. A lot of really key issues are on the line. You obviously know about the foreign policy side regarding North Korea, which is a major, major issue for Japan and for the United States.
On the economic and trade side, there will also be very important issues. Japan is a great friend and ally. We have certain disagreements with respect to some of the trading issues. We’ll iron those out, hopefully.
Mr. Abe is a friend of President Trump’s, and I think the general setting is going to be very positive. There are some bilateral issues. In fact, the United States would probably like to see a free trade agreement come out at some point with Japan.
And the rest of it is — I believe stocks are up 260 points. Yesterday was Tax Day. No, today is Tax Day. Lower taxes. Strong economic growth. Nobody believes that, except me. I’m hanging in there. We’re in the early stages of an economic boom here in the United States. And actually, Japan’s economy has improved quite a bit.
So instead of babble on, let me just stand up and take some questions. We have a team of experts that will try to help you out.
Q Thanks, Larry. Can you tell us if you or any of the other U.S. trade officials or U.S. economic officials have had any discussions at all with the Japanese side about a revived TPP? The President suggested that might be something you would do, and he ordered you to do that last week. Has that happened?
MR. KUDLOW: Yes, there are discussions and considerations. There’s nothing at all concrete. It’s too early to say. The President has asked me to give it another look, if you will. I think Japan is going to move towards a vote in their parliament on the matter. It’s a very important issue there.
I can’t say what we’ll do. It’s way too early.
Q What was the reception on the Japanese side when you broached that with them? Are they willing to engage with the United States on allowing the U.S. back into TPP?
MR. KUDLOW: Yes. Yes. But that’s all it is, if you will — talk.
Q When you say you’re going to look into TPP, what are you looking for?
MR. KUDLOW: Look, it’s got to be — I’m just going to be general on this; I don’t want to get into details. It has to be in U.S. interest for us to take another look and actually go into it.
The President believes it is not presently in U.S. interest to sign it. And that’s not a new point; he’s made that before.
Q But you’d be looking into negotiating it differently, right? This would not be looking into what had been generally agreed to. You’d be looking at a whole new set of negotiations and whether or not that’s worth the effort. Is that fair?
MR. KUDLOW: In policy content terms, it’s never been to our liking. So if we choose to go down that path — and that decision has not been made, I want to just be very clear. If we choose to go down that path, however, to “improve it,” we will have to be convinced that it’s worth our while. And I don’t think the President is yet convinced of that, to be honest. I don’t think he is.
Q Sir, what can the President offer Abe to sort of sweeten the pot to enter into a new bilateral trading agreement? Because Abe clearly comes down to the side of TPP as opposed to bilateral. And I think the idea of bilateral trade throws chills down his spine.
MR. KUDLOW: I’m going to wait for the talks to progress. It’s a good question. I don’t want to get ahead of it. I want to wait for the talks to progress. There are a lot of issues on the table, but I don’t want to get ahead of itself. To quote a hackneyed thing, I don’t want to get ahead of my skis. We’ll see. We’ll see. Really, we’ll see.
Q This might be a question better to you, Matt. But about North Korea, what is the President’s message about the upcoming meeting with Kim Jong-un? Can you give us any kind of — what’s the reassurance to the Japanese? Obviously, they’ve got some concerns about that. Do you have any update at all as to where that will be, when it will be? Do we still think it’s going to be in May? That’s what the announcement was. We’re rapidly approaching May.
MR. POTTINGER: Sure. So with regards to timing, I think the President’s public comments still stand. He said that it’s going to — we’re aiming for a summit in May or early June. Nothing has changed that. In terms of venue, we’ve nothing to announce right now about that, or really in terms of the details, other than what the President has said, which is this is — he has accepted an invitation to meet with the leader of North Korea to achieve the permanent denuclearization of North Korea.
So that is going to be one of the key topics that President Trump is going to be talking about with Prime Minister Abe. It has been, since President Trump came into office, one of the key topics. They’ve conferred extremely closely on this.
As I mentioned the other day, President Trump has met with Prime Minister Abe more than he’s met with any other foreign leader. And Prime Minister Abe and the President are going to want to exchange views in advance of a summit with the North Korean leader so that we make sure that Japanese interests and American interests are both fully accounted for. Japanese security interests are American security interests. That’s why we are allies. That’s what it means to have an alliance.
Q But what are the backchannel negotiations that are going on, on this?
MR. POTTINGER: Well, there’s nothing in terms of channels that I’m at liberty to talk about today. There will be more to share about that in the weeks ahead.
Hallie and then David.
Q Thanks, Matt. One for you, and then, Larry, a follow-up to you, as well. There’s some reporting out today that North Korea and South Korea may be announcing plans to officially end military conflict. Can you talk through what you and the administration know about that and how that plays into the talks?
MR. POTTINGER: Yeah. Someone just alerted me to the story. I haven’t read it yet. But I would just say that the U.S. and South Korea are as much aligned and coordinated on their summit as we are on a U.S. summit.
So we had the National Security Advisor of South Korea here just last week to have his first meeting with Ambassador John Bolton. Very substantive meeting. Very clear exchange of views on planning for both of these summits.
But at this point, there’s no advantage to sharing too much publicly yet.
Q And then, Larry, just as a follow to you on the TPP discussion, and then one other on taxes, actually. When you said that the President has expressed to you that he wants to give another look at reentering TPP, can you explain what prompted that, what triggered the President? Was there an activity? Was there something that you said to him that made him change his mind?
And then, just since you brought up Tax Day, too, apparently the IRS is crashing; the online system is down. Are you in touch with your Treasury counterparts on that? And what is the White House doing?
MR. KUDLOW: The IRS is crashing? (Laughter.)
Q I don’t know if you heard about it, but I didn’t know if you were in touch with the guys, with Secretary Mnuchin.
MR. KUDLOW: Sounds horrible. Sounds really bad. (Laughter.)
Q And on TPP, sir, can you explain —
MR. KUDLOW: I hope it gets fixed.
Q — what led to the President’s change of heart?
MR. KUDLOW: Look, the TPP thing — I don’t want to say you’re barking up the wrong tree; you’re not. I’m just saying, at the moment, we are in the pre-preliminary stages of any discussion at all. And we’ll see how that goes.
It will come up in this summit, no question about it. But for the American side, at the moment, it’s more of a thought than a policy, that’s for sure.
Look, the President said this in Davos — he’d be willing. Remember the line, “America first does not mean America alone”? That’s a very important line, and that’s about as far as I want to go on it.
Q Do you see TPP, potentially, as a bulwark — a potential bulwark against China? And is that part of the appeal of reentering TPP?
MR. KUDLOW: I think that our disagreements with China stand alone. We don’t need TPP; we don’t need anything. There’s trade disputes going on here that stand on their own regarding us and China. We don’t need TPP to do any of that stuff. It might work. It might hypothetically work, but that’s not where we are.
The President has an ongoing discussion with some policy items on the agenda, as you know. That includes tariffs and it includes negotiation. And we will see how that does. But our discussions with — our trade disputes with China stand alone from TPP.
Go ahead, John.
Q Question for Matt. You said that Japan’s security is in the interest of U.S. security. But clearly, Shinzo Abe is concerned about what talks with Kim Jong-un may mean for the security umbrella that the United States has in East Asia. What assurances can the President give Shinzo Abe today that his concerns will be taken into account in any meeting with Kim Jong-un?
MR. POTTINGER: Yeah. So since President Trump and Prime Minster Abe first met after the election, before the President was even inaugurated and in all of their interactions since — frequently on the phone, frequently in person — the commitment to the alliance by both sides has come through loud and clear in all those interactions.
So I think that there will be plenty of time for them to talk in some detail about objectives for a potential summit, for Japan to share its perspective. The President has a great degree of respect for Prime Minister Abe’s views on security in the region and on the Peninsula, and so they’ll cover a lot of ground, I think.
I know I tapped you, David, but —
Q Two quick ones. One, Matt, if you could talk a little bit about — there’s been some reporting in the South Korean media and elsewhere that negotiations are under way for the three Americans who are still held in North Korea to be released. Do you expect that to happen before a summit or as related to a summit? Is that a condition the U.S. expects?
And then, second of all, if you could just — because I know he’s on the trip, but he’s not here today — if you could talk a little bit about John Bolton’s — we know his very public views about North Korea. How has he approached the planning since he’s been here for about a week now? Can you talk about maybe what directions he’s offered, what vision he’s offered since planning was already under way?
MR. KUDLOW: We’ll let John speak for himself.
Q But can you talk about the other thing about the American detainees?
MR. POTTINGER: Yeah. I mean, in terms of — the fact that there are three Americans who are being held unlawfully in North Korea is something that is on the minds of all Americans serving in this administration right now. I’m not going to talk about how that factors in, but you can be assured that it factors very much into future interactions between our government and the North Korean government.
Q Is it a precondition?
MR. POTTINGER: Nothing to add beyond that.
MR. KUDLOW: I just want to make clear — there’s a lot of TPP questions — the United States trade discussion or trade dispute with China, which is very significant, is really in no way related to the TPP. The President regards them as two different issues, so that whatever happens or not with TPP, our discussions — our very serious discussions with China over forced technology transfers and theft of intellectual property and so forth and so on, that’s ongoing. That’s not linked to TPP. I just want to make that as clear as I can.
Q Larry, thanks. I want to ask you about the value of a number of free trade agreements in the region. It seems that the administration’s policy has been there’s nothing wrong with approaching each one of the partners over there and continuing to operate in that light. Is that the position as it relates to Japan specifically? And will you use that as a template for other nations in the region?
MR. KUDLOW: You know, the President said a number of times he greatly prefers bilaterals to multilaterals. That’s his comfort zone, his preference.
So in terms of your question, the answer is, yeah. I mean, you’ve got a lot of free trade agreements, and we’re taking a look at everything. Right now, the focus is on Japan. That’s the key point. I don’t want to speak to the other countries.
Q Do you agree with that posture, though? Or —
MR. KUDLOW: Pardon?
Q Do you agree with that strategy? Or are you going to try to influence the President to think more broadly?
MR. KUDLOW: I have a lot of discussions with the President. They’re all private discussions.
I’ll go over here, to be fair. Yes? Go ahead.
Q Thanks. You had talked about China a little bit earlier, so I wanted to get your response to the announcement from China earlier today. They were saying they’re going to lift some of the restrictions on foreign autos, but also they imposed new duties on sorghum. Does the U.S. see this as sort of a ratcheting down of the trade tensions between the U.S. and China? Or what’s your response to those actions this morning?
MR. KUDLOW: Whenever they’re moving in our direction in a conciliatory way, whenever they’re lowering barriers, that’s a good thing. That’s good for them, it’s good for us, and it’s good for growth on both sides and the rest of the world. When, however, they raise barriers, as they seem to be on the farm issue, that’s not good.
Q Thank, Larry. I just want to follow up on your answer to Hallie’s question about the IRS. You know, people are filing their personal income tax returns today. The system is down. You seem to not share a whole lot of concern for their plight. What is your message to the American people who are having difficulty filing their taxes?
MR. KUDLOW: Look, the IRS will straighten it out. I don’t know the nature of this whole story. I’ve just gotten wind of it.
You know, part of our tax policy, and part of the success of the tax cut plan is to simplify. And as the President and many others have said, this will be the last filing of the old, highly complex policies. It’s not perfect, but we’re gaining on it. That’s different than whatever technical breakdowns there may be in the Internal Revenue Service. They’ll fix that.
And we probably have more work to do on the simplification. We probably do. But this is a great down payment. And I do want to bring back this idea that lower tax rates; child credits, doubling the child credit; doubling of the standard deduction; lower small and large business taxes are all very positive all across the board, and the economy is responding positively.
We are in a growth mode. We’re running a percentage point above the prior baseline. And if we keep that up, either way, the deficit will be much, much less than it’s now scored in CBO and elsewhere. These are good things.
But I can’t — I honestly don’t know the inners of this. Was it a computer breakdown? I mean, yeah. Well, I’m sure they can fix it.
Q Thank you, Larry. A question for you, and then one for Matt. For you: The Japanese were the only major American ally that was not granted an exemption on the 232. Most people expect the Prime Minister to press the President on that. Do you see a path for granting Japan an exemption?
And then, just quickly to Matt. He’ll also — the Prime Minister — no doubt ask about intermediate-range missiles. Do you expect the President to give him comfort that not just intercontinental missiles, but medium-range missiles will be something that he’ll push for in the summit with Kim?
MR. KUDLOW: To your first question, it will be under discussion. It’s a key point on the agenda.
Q Do you see a path — a way that they could be granted?
MR. KUDLOW: I just don’t want to speculate on the outcome of the meeting.
MR. POTTINGER: You know, certainly the entire world recognizes the danger posed by the entirety of the missile arsenal of North Korea. It’s why the entire world is now implementing U.N. Security Council resolutions that were passed — four of them in this administration, the toughest ones yet. And all of them passed unanimously.
So yeah, we’re certainly going to be taking into account the full range of threats that North Korea poses to regional security, to the American people, and to our allies.
Q Okay, questions for each of you. First, Larry, can you talk a little bit about the relationship that the President sees between trade and security — marrying these two issues with Japan?
And then, Matt, I also had a follow-up question about what John asked about — what assurances that the U.S. will be able to provide Japan before sitting down with this meeting with North Korea. Because as you said earlier this week, the President and Prime Minister Abe are in constant contact. They’re talking frequently. So, surely, the President is well aware of what those concerns are that Prime Minister Abe has walking into this meeting today. So what is he prepared to offer Japan to mitigate some of those concerns?
MR. KUDLOW: President Reagan used to say, strong at home, strong abroad; weak at home, weak abroad. I believe President Trump shares that view, and that’s why economic growth is so important. That’s not the whole security story, obviously.
But if you’re looking for linkage, it’s right there. And our economy is now producing at a faster rate. This provides us with, first of all, more resources to do a lot of things, including national defense and security.
Second of all, the U.S. has become, frankly, a magnet for investment. We have become the hottest investment destination in the world. And that’s even beyond the repatriation of a couple of trillion dollars in the tax law change. This is, you know — we have lowered our barriers on regulations and tax rates and so forth, and so money is flocking to invest in the United States. That’s the first time we can say that in many, many years, so that’s a big plus.
And in terms of our relationships around the world, with respect to security — I’m not a security expert, but I would just say a stronger economy here puts us in a very strong position around the world. Very strong position. And that’s a good thing.
MR. POTTINGER: Like I said before, the reassurances that the President has provided from the beginning of his relationship still stand. And I don’t think that Prime Minister Abe will leave Mar-a-Lago with anything other than a high degree of confidence in the health of the alliance, including as we go into a summit with the North Koreans. I know that there’s some Japanese press in the back. I mean, we could tap on —
MR. KUDLOW: I got to go to deep right field. I promised.
Q Thank you so much. So in terms of deliverables, what does President Trump hope in terms of concrete deliverables coming out of this? Is there a possibility 232 exemptions could come out of this, or the beginnings of a bilateral free trade agreement, or any other concretes?
MR. KUDLOW: You know, as I’ve said before, this is all on the table. That’s why this is such an important meeting. But I don’t want to get ahead of that curve. I really don’t.
Now — yes, sir. You’ve been very patient. Thank you.
Q Thank you very much, Mr. Kudlow. You have been stressing the importance of the trade coalition of the willing, I think including Japan and Europe, which, in my view, is very compelling. But on the other hand, if the U.S. pushes ahead too hard with this trade agenda — prioritizing bilateral agreement — that may weaken your case or that may not work in a positive way for the U.S. to encourage better China’s behavior on trade to —
MR. KUDLOW: It’s just — look it. My statement, which is catching on, I’m glad — this trade coalition of the willing that I’ve been talking about, and others have been talking about, is really aimed at China. I mean, China is a first-world economy, behaving like a third-world economy. And with respect to technology and other matters, they have to start playing by the rules. And the President emphatically — empathically — supports that view. That is the essence of his policy, “Play by the rules, or there will be consequences.” It can be negotiated out if it’s satisfactory to both parties.
But I think — my point about China is: Our complaints, if you will, particularly with respect to technology but not only — you know, you’ve got various trade barriers to come down. You’ve got various market openings to come down.
But with respect to these disputes, the rest of the world is with us. The President hasn’t consciously sought this, but it’s happened. And it’s a good thing. So I think it strengthens our case. And I don’t want to get caught up in bilateral this, bilateral that. Europe, Britain, Japan, Asia, capitalist countries in Asia, Australia — they’re all behind us on this. And so I’m hoping that China reads that carefully and responds positively.
Q Slightly off-topic here, but if you don’t mind, is there confusion inside the administration on new sanctions toward Russia?
MR. KUDLOW: No. I think the issue here is we have a set of sanctions, and additional sanctions are under consideration but not been determined.
Q So why did Nikki Haley say that sanctions were coming on Monday?
MR. KUDLOW: She got ahead of the curve. She’s done a great job. She’s a very effective ambassador. There might have been some momentary confusion about that. But if you talk to Steve Mnuchin at Treasury and so forth, he will tell you the same thing. They’re in charge of this.
We have had sanctions. Additional sanctions are under consideration but not implemented, and that’s all.
Q Thanks. Just a quick question for Matt. Can you speak to the domestic political considerations that Abe brings to the table? Has the President been briefed on that? Is he of a mind to do or say anything during the summit that might boost Abe’s standing at home?
MR. POTTINGER: The President is, of course, well-briefed on the relationship, what’s going on — to some extent, domestically in Japan — just as Prime Minister Abe is being briefed as he’s flying right now, getting close to landing here in Palm Beach, on what’s going on the domestic front here. So it’s all part and parcel of the relationship.
Sometimes they talk about the respective politics in one another’s countries. They enjoy talking about it. So I don’t think there’s anything special to say about that at this point, though.
Q Hi, my name is Koji (ph) with the Asahi, and my question is on North Korea. And some experts think that negotiation with North Korea might be just buying their time on North Korea. So is there any possibility that Trump and Abe will talk about target year of denuclearization during their summit? Like 2020, for example?
MR. POTTINGER: I would just say that President Trump has a team of people working for him now who have extensive experience dealing with the North Korea nuclear menace. If there is any intention by the North to merely buy time for this program, there will be an unhappy result, I would say.
Q How about target year of — target year to achieve a denuclearization?
MR. POTTINGER: Yeah, nothing that I would comment on, specifically, about that right now at this point. It wouldn’t be appropriate. Yeah.
Q You said that the President has a team working for him now. Do you mean that a new team in place, as recently a team that was not in place, say, three months ago?
MR. KUDLOW: There are newcomers and there are old-timers.
Q (Inaudible) the team that’s around the President now is now more attuned to, as you said, the menace posed by North Korea than the team that was around him in the past?
MR. KUDLOW: No, no. No. No. It’s just a lot of good people. And as I say, there are some newcomers and there are some old-timers.
Yes, in the back. Yes.
Q I just want to try one more TPP question for you. Just a second ago, you said that the trade coalition of the willing is relating to China, but then earlier, in saying that the trade discussions with China is in no way related to TPP. Isn’t there some sort of a contradiction there in that TPP essentially would be that trade coalition of the willing?
MR. KUDLOW: Not necessarily. Remember, this coalition is global. It’s not just Pacific Asia. And I think everybody is heartened at the positive response from the European countries and Great Britain. That’s why I’ve tried to delineate not to mix the two up. They’re separate tracks.
Q I just have one more on tariffs. Are you expecting that the Prime Minister will ask for an exemption on the steel tariffs? And what is the President considering he would offer?
MR. KUDLOW: I wouldn’t be surprised if he did.
Q If he asks?
MR. KUDLOW: Pardon?
Q If he asks, that’s what you would not —
MR. KUDLOW: Wouldn’t be surprised.
Q And then what? And then what?
MR. KUDLOW: I can’t say. I mean, let’s see what happens. Let’s see what happens. If you want Kudlow predictions, you’re not going to get them. (Laughter.)
Q But you’re so good at that.
MR. KUDLOW: I know, but that was another life. (Laughter.)
Other questions, please. I don’t want this to get out of hand.
Q Larry, can I just ask —
MR. KUDLOW: Sorry?
Q What would it take for them to get an exemption?
MR. KUDLOW: You know, there’s no strict conditionality. There will be discussions about that. The President has some very clear views on the matter, and he will communicate them.
Q One question for Matt, if I could. Just on this news about South Korea saying that South Korea and Kim Jong-un could sign some sort of peace treaty, if not at the summit in Pyeongchang, that maybe soon after that. How would that change, if you could, the whole calculus of the U.S. meeting with Kim?
MR. POTTINGER: Look, the President is focused on a potential summit here that he’s accepted an invitation to attend. He’s staying in very closed coordination and contact with President Moon. And at the level below the Presidents, there’s probably a higher degree of coordination taking place than has ever taken place since the end of the Korean War. There will be plenty of time to talk about the goals of that inter-Korean summit and how they might mesh with goals for President Trump’s own. But there’s nothing I want to go into specifically about it today.
Q Matt, can I throw one more to that? And forgive the millennial slang on this, but given — I mean, you know the President and Shinzo Abe have had a close relationship. There’s, as you know from these questions, trade tensions, there’s discussions of their involvement in any kind of summit with North Korea. Are they still in a bromance or has that cooled off? (Laughter.)
MR. POTTINGER: It’s not a term I use. I’m not a millennial. I’m a Gen-Xer and proud of it.
MR. KUDLOW: That’s millennial speak. Millennial speak.
MR. POTTINGER: But, you know, I’m sure you’ll make your own judgments based on the chemistry that will be evident when he arrives here later this afternoon.
Q What is your judgment on that, though?
MR. KUDLOW: I’m a Baby Boomer. You didn’t ask that. I’m a Baby Boomer.
Q The fact that Japan wasn’t consulted in any way before the President sort of abruptly announced this potential summit with North Korea, can you speak — is there some need to mend fences? Why wouldn’t the U.S. have consulted this ally that he’s so close to before making such a significant announcement that could be defining to his time in office, Matt?
MR. POTTINGER: So the President has kept in such close contact with Prime Minister Abe that when the announcement was made — you’ll have to ask the Japanese whether, in fact, they felt that they were not pre-consulted. I’d be surprised if they would say that that was the sense.
Q Were they? I’ll ask you: Were they pre-consulted? Did we speak to the Japanese before the announcement?
MR. POTTINGER: I won’t go into the details about — but I think you should ask the Japanese whether it was a surprise to them. And Prime Minister Abe took the opportunity to reach out, and the two immediately decided that it made sense to meet well in advance of that summit.
Q Matt, picking up on (inaudible) potential summit. You said potential summit. Do you still think it’s more probable than not that this summit will occur? Or do you think it’s more probable that it won’t occur?
MR. POTTINGER: I’ll let the President’s public statements stand on that.
Q Right, but you said potential summit. And I’m just trying to understand what you’re conveying by that.
MR. KUDLOW: Look, the President’s intention is to have a summit.
Q Right, I know —
MR. KUDLOW: The terms, the places, none of that has been settled yet. None of that has changed. Just not — it’s not changed. That will probably come up in this summit, and we’ll see what additions we learn.
And I just want to say — we’re going to wrap here — I understand lots of details and so forth, which I can’t answer. And I apologize, but it’s going to be a very interesting summit.
Look it — these are two old friends. Okay? These are two democracies. These are two free-market capitalist democracies who are trying to improve economic growth for both their countries and their regions and the rest of the world. I don’t want to lose sight of that. We’re here to help each other. We have great relations with Japan, and that’s going to be enhanced by this conference. And I just want to instill that thought.
I appreciate — sorry we can’t answer every question, but it will see as it unfolds. Thank you very much.
12:54 P.M. EDT