Influential anti-tax activist Grover Norquist to Trump: 'Tariffs are taxes' — leverage world outrage over China trade instead

  • "Tariffs on Chinese goods are paid by American consumers," says the Americans for Tax Reform founder.
  • As an alternative to tariffs, Norquist advocates the U.S. working with allies to pressure China on trade.
  • President Trump, who agreed last weekend with Chinese President Xi on a tariffs cease-fire, tweeted Friday that China talks are going "very well."

President Donald Trump should use a different approach than tariffs to pressure China to change its trade practices, anti-tax activist Grover Norquist told CNBC on Friday.

"Tariffs are taxes," said Norquist, founder and president of Americans for Tax Reform. "It's a weapon, tariffs, that raise the costs of goods and services on Americans. Tariffs on Chinese goods are paid by American consumers."

Norquist said on "Squawk Box" that he's hopeful that the Trump administration will be able to reach a deal to resolve the trade dispute between Washington and Beijing. He said the U.S. needs to get China to modify its ways.

Last weekend, Trump and Chinese President Xi Jinping agreed to a 90-day period of no new tariffs on each other's goods as negotiations continue. On Friday morning, Trump tweeted that China trade talks are going "very well."

Just hours later, Trump economic advisor Larry Kudlow told CNBC that the president would consider extending the 90-day tariff truce with China if "good" progress is made in trade talks. Meanwhile, White House trade policy advisor Peter Navarro, a China hawk, told CNN if there's no agreement during the 90 days, U.S. officials would move forward with raising tariff rates.

As an alternative to tariffs, Norquist advocates that the U.S. leverage what he describes as outrage around the world about China's protectionist trade policies. "We have as allies here the Europeans who feel mistreated by China for all the same reasons President Trump and the American businessman do."

"We have more leverage in this fight because the world is at our back, unlike the fight with Europe or the fight with Canada and Mexico. The rest of the world goes, 'We're with the Americans on this one.' That's helpful," said Norquist, whose group is a powerful force in conservative politics. ATR pushes legislators and political candidates to sign its Taxpayer Protection Pledge, a written promise to oppose any efforts to increase taxes on working Americans and U.S. businesses.

Norquist also suggests that the Trump administration should seek better trade deals with other nations in Asia to make it easier for businesses "to run their supply chains through Indonesia, through Japan, through Korea" rather than China.

Aiming to do just that, the Trans-Pacific Partnership, negotiated by the administration of President Barack Obama, was abandoned by Trump days after his January 2017 inauguration, fulfilling a campaign promise.

However, Norquist said the president could seek better TPP terms like he did when he orchestrated the replacement of NAFTA, the 1994 North American Free Trade Agreement, with the new USMCA, United States-Mexico-Canada Agreement.

"NAFTA is now the treaty formerly known as Prince. So we can take TPP and say, 'Hey, you know what? It's not this other thing.' Make some changes. Good for a start," said Norquist, evoking the time when the late singer Prince changed his name to a symbol to make a point.

Sign Up for Our Newsletter Morning Squawk

CNBC's before the bell news roundup
Get this delivered to your inbox, and more info about about our products and services.
By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.