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U.S. stocks were deep in the red Wednesday after China retaliated against the Trump administration’s proposed penalties on Chinese goods, but one of the president’s top advisers is telling markets “don’t overreact.”
At the end of this whole process, the end of the rainbow, there’s a pot of gold.
Larry Kudlow, who took over as the head of the National Economic Council this week, told Fox Business he understood market anxiety about the trade conflict. “I get that,” he said.
But he said he thought there would be better economic growth, more trade, and “improved wages for both sides” — what he described as a “pot of gold.” He described the Trump administration’s aim as ultimately getting rid of trade barriers. “Any time you lower barriers,” he said, “it’s good for growth.” He added, “it’s good for American growth and American workers. It’s good for China’s growth. It’s good for the rest of the world’s growth.”
See: China threatens U.S. cars, planes and soybeans with tariffs in response to Trump.
Yet it’s unclear when, or how, trade tensions will let up. Earlier Wednesday, Commerce Secretary Wilbur Ross said the spat with China could end in some sort of negotiations between Washington and Beijing. But he didn’t suggest the dispute was ending soon.
Read: Wilbur Ross on China trade: ‘Even shooting wars end with negotiations.’
Meanwhile, investors were rattled by the tensions, causing the Dow Jones Industrial Average DJIA, -0.27% to shed 500 points at the open. The S&P 500 index SPX, -0.02% dropped 1.1%.