LARRY KUDLOW: Mr. Trump knows exactly what he's talking about

Gulf of America sounds just perfect to me and that's the subject of the riff. Let's start with the Gulf of America. Before, it had been the Gulf of Mexico, but it was named in the 16th century – before the United States of America even existed. 

So "Gulf of Mexico" sounds outdated to me. It's time for a change. Mr. Trump today basically said "Gulf of America" has a big beautiful ring to it. Sounds like his endorsement of one big, beautiful budget bill to cut taxes and seal the border, but, speaking of sealing the border, doesn't sound at all like Mexican President Claudia Sheinbaum has yet done very much to help the U.S. seal the southern border – for example with 25,000 troops that helped ensure President Trump's first-term success of "Remain in Mexico."

He threatened a 25% tariff on Mexico if they don't cooperate. Whatever happened to the Monroe Doctrine? Codified over 200 years ago, it made clear that the U.S. will not permit European interference in Latin America and, when you toss in the Panama Canal that Mr. Trump also mentioned today, you should add that the U.S. cannot tolerate Chinese interference in America's core interests. 

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Then, as Mr. Trump also tossed in Greenland, the same core-interest principle applies with our adversaries Russia and China nosing around – not simply for rare earth minerals, but also building a stronghold for air forces and naval power. President Trump also threatened Canada with a 25% tariff if they don't cooperate on our northern border. Trump's trolling of Justin Trudeau about Canada becoming the 51st state basically knee-capped the left-wing Prime Minister right out of the ballpark and into retirement. 

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Finally, speaking of tariffs, a recent Washington Post article that President Trump was pulling back on his universal tariff plans was, as Mr. Trump put it, fake news. Hat tip to the brilliant economist Larry Lindsey for pointing out that U.S. imports run about $5 trillion per year and that a 10% broad-based tariff would produce roughly $500 billion that would more than cover Mr. Trump's tax cuts, and then some. 

Tariffs aren't inflationary. Only excess money is inflationary. Meanwhile, the European Union has value-added taxes, which are essentially tariffs, that run around 20% – and the world has lived with that for a long time. All this suggests to me that, just like with his big beautiful tax cut and border bill, Mr. Trump knows exactly what he's talking about. That's the riff. 

This article is adapted from Larry Kudlow’s opening commentary on the Jan. 7, 2025, edition of "Kudlow."