CNBC's Jim Cramer has watched the market parse what longtime CNBC host Larry Kudlow's new role as director of the National Economic Council will mean for U.S. trade policy.
"But if you want to know where Larry stands on the actual issues, all you need to do is listen to the conference call from FedEx last night," the "Mad Money" host said on Wednesday. "In all of the years I worked with Larry on 'Kudlow & Cramer,' no executive came closer to his views than Fred Smith, the founder, chairman and CEO of FedEx."
Considering FedEx's growing international exposure, Cramer argued that Smith, a former Marine and Washington heavyweight, can't afford not to share his outlook on the state of global trade.
In the conference call following FedEx's third-quarter earnings report, the shipping chief asked everyone on the call to look up the definition of the word "tariff:" a tax on a particular type of import or export.
Smith then distanced himself from President Donald Trump's stance on trade, voicing his concerns about "increased protectionist tariffs" and arguing that protectionist policies were historically "counterproductive to economic growth."
saying that benefits from the tax reform bill would be offset by higher taxes from the tariffs.
Smith then doubled down on his push for free trade, noting that the U.S. trade deficit in total goods and services is now 2.9 percent of GDP, or gross domestic product, compared to 4.9 percent 10 years ago.
The CEO attributed the decline to two key shifts: technological advancements in the oil and gas sector that curbed the United States' dependency on petroleum imports, and the growing trade plus in services, including logistics services like FedEx's.
What Cramer learned from the call was that FedEx would oppose restrictions to trade and support the free exchange of goods and services, which Kudlow has championed over the years.
"The question is which Larry Kudlow are we going to get, the one with fealty to Fred Smith's vision or the one to Donald Trump's vision?" Cramer said. "It's an open question, and I think this clash of ideas will define the next big move for, actually, the stock market. If the pro-free-trade faction prevails, I think we do go higher. If they lose, I think we go lower."
WATCH: The connection between Kudlow and the FedEx earnings call
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