'We have them over a barrel' — Larry Kudlow says tough US tariffs give Trump an edge in China trade talks

Key Points
  • "We have hurt them," says Kudlow, referring to the Chinese economy. "On the other hand, we would like a good deal. Both countries should benefit."
  • Trump won't enter a trade agreement with China that hurts the U.S., says the director of the president's National Economic Council.
Larry Kudlow on China trade talks: 'We have them over a barrel'

President Donald Trump's aggressive tariffs have taken their toll on the Chinese economy, giving Washington the edge in trade talks with Beijing, top White House economic advisor Larry Kudlow said Friday.

"We have them over a barrel," said Kudlow, director of the president's National Economic Council. "On the other hand, we would like a good deal. Both countries should benefit."

Kudlow, a former CNBC commentator, pointed to overnight economic data from China, showing that dollar-denominated exports there plunged 20.7 percent last month from a year ago, missing expectations by a wide margin.

"We have hurt them," Kudlow said on "Squawk on the Street," as both sides hope the finish line to resolving their trade war is near. "We are still negotiating by phone and teleconference."

"The documents from two weeks ago advanced enormously. That's why the president is optimistic about the potential for a deal," Kudlow added. But he stressed, "I don't want to hang a timetable on this."

However, Kudlow did signal that Trump and Chinese leader Xi Jinping could meet regarding their trade dispute later this month or early next month at the president's Mar-a-Lago resort in Florida. "Nothing in cement, but there's a lot of talk."

As Kudlow was speaking on CNBC, Trump told reporters at the White House that he remains confident a trade deal will be reached. But the president added that the U.S. will do well with or without an agreement.

Kudlow emphasized Trump's message. "He's very serious, if we don't get a good deal for the United States ... then we won't get a good deal. You saw him walk away from North Korea" nuclear talks in Vietnam last week.

Trump and Xi agreed in December, at a dinner after the G-20 summit in Argentina, to halt any new tariffs until March as negotiators continued talks. Last month, Trump extended that deadline, citing progress in trade talks.

The U.S. has imposed import levies on $250 billion in Chinese products: 25 percent on $50 billion worth and 10 percent on the rest. Trump has threatened to also raise the rate on the $200 billion to 25 percent if a deal were to be elusive. China has hit $110 billion in U.S. goods with tariffs.

In the same CNBC interview Friday, Kudlow said the shockingly low reading on job growth in the government's February employment report was "very fluky." He said he wouldn't pay any attention to it.

— Associated Press contributed to this report.

WATCH: Here's the full Kudlow interview

Watch CNBC's full interview with Larry Kudlow following weak jobs data