The White House Is Embroiled in an Internal ‘Trade War’

Larry Kudlow has not been at the center of the internal White House battle over China and trade. But he was almost shut out of talks with Chinese officials set to kick-off Thursday because of it.

The White House trade fight burst into the open this week when Axios’ Jonathan Swan reported on a heated argument between Treasury Secretary Steven Mnuchin and White House trade adviser Peter Navarro that broke out during the recent trip to China by the Trump administration’s leading economic officials.

Shortly afterward, Bloomberg reported that Navarro would be excluded from meetings with the trade delegation from China.

This sent shock waves through the ranks of many of the president’s supporters outside the White House. The exclusion of Navarro, an academic who has written extensively on China and is considered one of the toughest China hawks in the administration, seemed to send a signal that the U.S. was softening its stance on trade with China.

“The Chinese only respect strength. And when they look across the table and Navarro is sitting there, that’s what they see: strength. Because they fear Peter. When they look across the table and they see Steve Mnuchin and no Navarro, all they see weakness,” a former administration official told Breitbart News.

Facing backlash from economic nationalist supporters of the president, the White House pushed back against the story that Navarro would be shut out. “Senior officials who will be participating include NEC Chair Larry Kudlow and trade advisers Peter Navarro and Everett Eissenstat,” a White House official said.

The statement was a bit of a head-scratcher. Why mention Kudlow at all? There had been no previous reports that he would be excluded from the meetings.

Yet Kudlow had been excluded from the meetings–as a way of excluding Navarro without singling him out personally, a person familiar with the matter said. The idea was that if the first day of meetings could be reserved for cabinet-level officials and their staffs, Navarro could be kept out because as a “senior adviser” he is lower ranked. Kudlow, as director of the National Economic Council, would also be excluded.

As of early Thursday morning, Navarro had still not been formally invited to the White House meetings, according to a person familiar with the matter. CNBC’s Kayla Tausche on Thursday morning reported Navarro would not attend and that the plan to reserve the meeting for cabinet-level officials only was back on. The meeting will be run by Mnuchin and attended by U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross, a person familiar with the matter said.

Navarro is on the list to attend a state dinner tonight with Chinese officials, according to this person.

Although unnamed administration officials have said that Navarro was being excluded because he was not a “team player” and behaved unprofessionally on the China trip, this is disputed by people familiar with the situation. The confrontation between Navarro and Mnuchin was provoked by Mnuchin’s decision to meet privately with Chinese officials in Beijing, locking out the rest of the delegation, including Lighthizer, Ross, Kudlow and Navarro.

“Mnuchin was going into business for himself and Peter called him out for it,” one person familiar with the altercation said.

Far from demonstrating that he is not a “team player,” Navarro was the one who stuck up for the team, this person said. It was Mnuchin who was acting unilaterally, canceling nearly a full day of meetings so he could hold one-on-one talks with Chinese officials, according to this person.

As of Thursday morning, the China trade fight showed no sign of having been resolved. If anything, they may be escalating.

Navarro has said that Mnuchin or his advisers on Wednesday began a series of coordinated leaks to get out in front of the story that the president’s trade adviser was ousted from the upcoming meetings, Fox News’ Charles Gasparino reported Thursday.

This is provoking Navarro’s allies and economic nationalists to push back against Mnuchin and his cohort.

“The recent attacks against Navarro are nothing more than a coordinated leak campaign from anti-America First traitors in the administration,” one former administration official told Breitbart News. “With White House leaking being at the forefront of the president’s concerns, the White House should identify and fire every person behind the recent leaks against Navarro.”