LARRY KUDLOW: Tariff diplomacy means crank up the Trump tax cuts

One thing we’ve learned about President Donald Trump’s tariff diplomacy is that he’s not bluffing.

He did offer Mexico President Sheinbaum a 30-day pause in the 25% tariff.

That’s because at the last moment she came in with a proposal to put 10,000 troops on the border to stop illegal immigration and curb the flow of fentanyl and other deadly drugs.

Identically Canada’s Trudeau did the same thing – so another 30 day pause.

Shows you what strong, decisive, and energetic leadership can do. 

These are big Trump wins. 

But rest assured Mr. Trump was ready to pull the trigger. And I agree with his use of tariffs to protect both national and economic security.

Now here’s a related thought.

Mr. Trumps aggressive use of tariffs should bring the Republican Congress great incentive to get the tax cuts passed.

Both the 2017 tax cut extension and some of the new Trump 2.0 tax cuts such as the 15% corporate tax, ,tax free tips for service workers, overtime pay and seniors.

Remember one of the good arguments posed by the President was that tariffs would generate revenues and revenues could finance tax cuts.

The 10% universal tariffs baseline that I strongly favor would of course allow Mr. Trump to seek reciprocity in bilateral negotiations.

But it could also provide something like $500 billion give or take to finance tax cuts.

In effect regarding the rest of the world, you tax us, then we’ll tax you back.

But our tax take will be given right back to our businesses and blue-collar working families.

And then in the spirit of reciprocity, if you stop taxing us then we’ll stop taxing you.

But who can tell if the tariff truce between Trump and Sheinbaum and Trudeau will continue longer than a month.

Mexico is a tough case because its basically became a narco state.

China’s exporting raw materials for fentanyl and other drugs, and the cartels put them all together in these hideous drug factories. And then the cartels bring them into the U.S. killing hundreds and thousands of Americans. 

It’s the worst thing I’ve ever seen.

Mr. Trump is willing to tariff Mexico til the end of their time until they stop allowing this.

So once again, my message to Republican House and Senate members: please crank up those tax cuts into one big beautiful bill to be finished this spring, and help launch the Trump golden era, blue-collar boom.