The future is bright for US small businesses, according to White House National Economic Council Director Larry Kudlow.

As part of a conference organized by The Washington Post on Thursday, the policymaker explored the current economic climate, focusing on issues such as the US-China trade war, the 2018 midterm elections and the possibility of a federally mandated minimum wage. The Washington Post’s Robert Costa interviewed Kudlow, and below are some edited excerpts from the discussion.

Washington Post: Is President Trump’s trade war responsible for the recent dip in the stock market?

Larry Kudlow: “I doubt it very much. The economy is so healthy right now and profits are soaring. Corrections come and go. I’ve been around the stock market and used to work as a Wall Street economist. You can’t predict it. My personal opinion is the big tech stocks got pretty toppy and were due for a correction. I don’t think trade enters into it.”

WP: Is this the start of long downturn?

LK: “I don’t think so. To me, the economy looks so strong and durable right now. Confidence is up. Jobs are up. Small businesses are up. We’re seeing very good business investment, which is really the heart of a solid recovery. Maybe a little sloppy in the third quarter, but capital goods orders are huge right now. Profits are the lifeblood of the economy. Profits are going to continue to rise and we’re hitting on all cylinders.”

WP: If Democrats take over the House, what should small businesses expect? What does that mean for the Trump economic agenda?

LK: “There are some nerves about the election. Small business and all business and frankly, the workforce, are enjoying a very strong economic boom. And it’s quite unexpected as critics said we’d achieve 1-2% growth, but we’ve broken to 3% plus. Small business is estimated to have a 19%-20% effective tax rate, down from almost 40%.

They’re worried about red tape and regulations and the energy boom. We will be pumping about 15 million barrels of oil per day in about 2 years, according to the Interior and Energy Department. We have so much natural gas that they’re flaring and burning it off. Hopefully, we can build a lot of pipelines and sell it to Europe, undermine Russia. Sell it to Asia, maybe undermine China. Why would you want to overturn what appears to be a very strong economic period backed up by pro-growth policies?”

WP: A lot of small businesses are worried about this trade war. They’re wondering just how far this administration is willing to go in its trade war with China.

LK: “Folks like a president who ends the war on business. That became apparent when these confidence indexes jumped right after the election. With lower tax rates, you keep more of what you’ve earned. You’re rewarded for being successful.

Specifically regarding trade, I understand there are questions and perhaps anxieties about trade. First of all, the president would like to abolish tariffs, nontariff barriers and subsidies. He is a free-trader. But we are stuck with a lot of unfair foreign trade practices that have been harmful to the US workforce and economy. Frankly, the principal culprit is China. The president has used tariffs as a negotiating tool. He said if we could reach a satisfactory deal with China, the tariffs could be pulled. If we don’t, which includes intellectual property theft, forced technology transfers, lack of ownership, cyber security and high tariffs on commodities and industry supplies, then the president will continue to aggressively pursue his agenda. You can’t have free trade with this bill of attainder and China is breaking the rules.”

WP: What does it mean for US small business if China’s own economy continues to struggle?

LK: “I’m not going to deny that there could be some very modest effect on the US economy. I know a lot of small businesses are import and export, I love that. We can do it without China, right now we are. We put up a lot of tariffs. Our small businesses are soaring, soaring. They’re killing it.”

WP: Should small businesses expect 3% growth next year?

LK: “Yes, yes. Maybe higher. We will put out our budget, but 3% is a good number to think about. I believe the biggest story in 2018 is an economic boom that almost everyone said would be impossible.”

WP: If the Democrats get any kind of power on Tuesday, they’re going to come and say Larry, President Trump, we want a $15 federal minimum wage. Is there any way you can go up to that level and cut a deal with us?

LK: “I can’t speak for the president. My view is no. A federal minimum wage is a terrible idea and will damage particularly small businesses. To force them to take a payroll increase would be silly. Idaho is different from New York. Alabama is different from Nebraska. That’s why it doesn’t work for me.”