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Economy

Trump turns to loyalist Larry Kudlow as economic adviser amid shake-up

Larry Kudlow

Donald Trump has chosen economist and CNBC contributor Larry Kudlow to replace Gary Cohn as director of the White House National Economic Council, adding a longtime confidant to the president's inner circle.

White House Press Secretary Sarah Huckabee Sanders said Mr. Kudlow "was offered, and accepted, the position." She added the administration "will keep everyone posted on the timing of him officially assuming the role."

Mr. Kudlow said in an interview with CNBC that he's "honored to take the job" Mr. Trump offered, adding that he has "known him for a long time."

Mr. Kudlow is expected to provide a familiarity and loyalty to Mr. Trump as the president removes moderating and dissenting voices from his administration. The president, who cited differences over Iran when he fired Secretary of State Rex Tillerson on Tuesday, has tired of a senior staff that often opposed causes he championed as a candidate.

A television host from New Jersey, Mr. Kudlow is seen as temperamentally and politically similar to the president. He's also seen within the White House as having credibility on both Wall Street and in Washington, where he served as an adviser to President Ronald Reagan.

That's critical to Mr. Trump, who has seen his White House hemorrhage top aides as his presidency enters a crucial stretch of foreign and domestic policymaking ahead of November's crucial midterm elections.

Mr. Kudlow's views on trade, however, could be a source of friction after Mr. Trump's recent move to impose steep tariffs on steel and aluminum imports.

"He is a cheerleader for growth," said Neil Dutta, head of U.S. economics at Renaissance Macro Research. "He regularly says 'free market capitalism is the best path to prosperity.' He is a forceful advocate for open markets and trade liberalization, and more generally an economic libertarian who favors low taxes and less regulation."

Mr. Kudlow, in the CNBC interview, said that he doesn't support "blanket tariffs," but does see justification for targeting certain countries. "China needs a comeuppance on trade. I believe that."

Mr. Cohn announced his departure last week after Mr. Trump moved forward with the metals tariffs — a plan Mr. Cohn had vociferously opposed.

Mr. Kudlow clashed with Mr. Trump in the past. In 2016, when a tape surfaced before the election featuring Trump boasting about grabbing women's genitals, Mr. Kudlow said he was "furious" and threatened to vote for Mike Pence as a write-in candidate.

Earlier this month, he wrote a column for CNBC describing the president's tariffs as "a regressive tax on low-income families."

"Trump should also examine the historical record on tariffs, because they have almost never worked as intended and almost always deliver an unhappy ending," Mr. Kudlow wrote in the March 3 column, which also included praise for other parts of the president's economic agenda. Mr. Kudlow has strongly backed the tax overhaul that Mr. Trump signed at the end of last year.

Yet, as he left the White House on Tuesday for a trip to California, Mr. Trump said Mr. Kudlow "now has come around to believing in tariffs."

Mr. Kudlow indicated the administration was readying a larger round of tariffs against Chinese imports.

Mr. Kudlow's economic forecasts on CNBC and in a regular column in the past decade have sometimes been off the mark. In December 2007, the month the National Bureau of Economic Research later dated the start of the worst recession since the 1930s, he was arguing there was no recession and that the "Bush boom continues."

Mr. Kudlow contended there was no housing bubble before U.S. housing prices crashed. And he warned in 2010 that former Federal Reserve Chair Janet Yellen would usher in a new era of higher inflation, while instead price gains have fallen short of the central bank's 2% forecasts.

His best prediction has been that the stock market would go up if Mr. Trump were elected, contrary to many economists including Paul Krugman who predicted a decline.