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  • \"FOX NEWS SUNDAY\" .\"

  • >> HELLO AGAIN AND HAPPY

  • MOTHER'S DAY FROM FOX NEWS IN

  • WASHINGTON.

  • PRESIDENT TRUMP SHOWS NO SIGNS

  • OF BACKING OFF HIS TRADE WAR

  • WITH CHINA AFTER NEGOTIATORS

  • FAILED TO STRIKE A DEAL.

  • ON FRIDAY HE MORE THAN DOUBLED

  • TARIFFS ON SOME 5,000 CATEGORIES

  • OF CHINESE PRODUCTS INCLUDING

  • FURNITURE, ELECTRONICS, AND

  • OTHER CONSUMER GOODS.

  • THE PRESIDENT IS THREATENING TO

  • IMPOSE TARIFFS ON ESSENTIALLY

  • ALL REMAINING IMPORTS FROM

  • CHINA, THAT'S ANOTHER

  • $300 BILLION OF PRODUCTS.

  • JOINING US NOW FOR AN EXCLUSIVE

  • INTERVIEW TO DISCUSS WHAT

  • HAPPENS NEXT, PRESIDENT TRUMP'S

  • TOP WHITE HOUSE ECONOMIC

  • ADVISOR, LARRY KUDLOW.

  • WELCOME BACK TO

  • \"FOX NEWS SUNDAY.\"

  • >> Larry: THANK YOU, CHRIS,

  • APPRECIATED, HAPPY MOTHER'S DAY.

  • >> Chris: THANK YOU.

  • I'M NOT SURE WE SHOULD BE SAYING

  • HAPPY MOTHER'S DAY TO EACH OTHER

  • BUT I WILL TAKE IT.

  • I WANT TO START WITH SOMETHING

  • THAT YOU SET A COUPLE OF WEEKS

  • AGO WHEN YOU WERE PRETTY

  • OPTIMISTIC ABOUT A TRADE DEAL

  • WITH CHINA.

  • HERE YOU ARE.

  • >> I THINK WE ARE ON ABOUT THE -

  • >> I THINK WE ARE ON ABOUT THE A

  • >> I THINK WE ARE ON ABOUT THE D

  • >> I THINK WE ARE ON ABOUT THE L

  • >> I THINK WE ARE ON ABOUT THE N

  • >> I THINK WE ARE ON ABOUT THE E

  • >> I THINK WE ARE ON ABOUT THE .

  • MAYBE EVEN THE 5-YARD LINE

  • LOOKING INTO THE END ZONE.

  • >> Chris: WHAT YARD LINE ARE

  • WE ON NOW AND WHAT SET US BACK?

  • >> Larry: WE MAY STILL BE ON

  • THE FIVE OF THE SEVEN BUT AS I

  • SAID IN THAT CLIP, THOSE OF THE

  • TOUGHEST YARDS TO GET.

  • SO LOOK, THE SITUATION FOR US,

  • FROM OUR STANDPOINT, WE WERE

  • MOVING WELL, CONSTRUCTIVE TALKS

  • AND I STILL THINK THAT'S THE

  • CASE, WE ARE GOING TO CONTINUE

  • THE TALKS AS THE PRESIDENT

  • SUGGESTED IN HIS TWEET ON

  • FRIDAY, BUT THE PROBLEM IS TWO

  • WEEKS AGO IN CHINA THERE WAS

  • BACKTRACKING BY THE CHINESE AND

  • WE COVERED THE SAME GROUND THIS

  • PAST WEEK, AMBASSADOR LIGHT

  • HEISER AND SECRETARY STEVEN

  • MNUCHIN.

  • WE CAN'T FORGET THIS, THIS IS A

  • HUGE DEAL, BROAD OF SCOPE AND

  • SCALE OF ANYTHING THE TWO

  • COUNTRIES HAVE HAD BEFORE BUT WE

  • HAVE TO GET THROUGH A LOT OF

  • ISSUES FOR MANY YEARS CHINA

  • TRADE IT WAS UNFAIR,

  • NONRECIPROCAL, UNBALANCED, IN

  • MANY CASES UNLAWFUL.

  • SO WE HAVE TO CORRECT THOSE AND

  • ONE OF THE STICKING POINTS RIGHT

  • NOW AS WE WOULD LIKE TO SEE

  • THESE CORRECTIONS IN AN

  • AGREEMENT WHICH IS CODIFIED BY

  • LAW IN CHINA, NOT JUST THE STATE

  • COUNCIL ANNOUNCEMENT.

  • WE NEED TO SEE SOMETHING MUCH

  • CLEARER AND UNTIL WE DO WE HAVE

  • TO KEEP OUR TARIFFS ON, THAT'S

  • PART OF THE ENFORCEMENT PROCESS

  • AS FAR AS WE ARE CONCERNED OF

  • THE PRESIDENT HAS SAID THINGS

  • SEEM TO BE TAKING TOO LONG AND

  • WE CAN'T ACCEPT ANY

  • BACKTRACKING.

  • WE ARE REPRESENTING THE

  • UNITED STATES, ECONOMY, FARMERS,

  • AUTOWORKERS, MANUFACTURERS,

  • THESE ARE CRUCIAL PARTS OF THIS

  • DISCUSSION, SO WE WANT TO BE AS

  • SURE AS WE CAN BE, WE DON'T

  • THINK THE CHINESE HAVE COME FAR

  • ENOUGH.

  • WE WILL WAIT AND SEE, THE TALKS

  • WILL CONTINUE AND I WILL SAY

  • THIS, THE G20 MEETING IN JAPAN

  • TOWARD THE END OF JUNE NEXT

  • MONTH, THE CHANCES THAT

  • PRESIDENT TRUMP AND PRESIDENT XI

  • WILL GET TOGETHER AT THAT

  • MEETING ARE PROBABLY PRETTY GOO

  • GOOD.

  • >> Chris: SO HE POINTED OUT

  • THE PRESIDENTS TWEET ON FRIDAY

  • WHERE HE SEEMED PRETTY

  • CONCILIATORY.

  • IN FACT, THE STOCK MARKET, WHICH

  • I DROPPED DRAMATICALLY FRIDAY

  • WITH NEWS THAT THE TALKS, THE

  • NEGOTIATIONS HAD ENDED WITHOUT

  • ANY DEAL, ROSE ON THE KIND OF

  • CONCILIATORY OPTIMISTIC TONE

  • FROM THE PRESIDENT AND FROM THE

  • PROJECT ON MY TREASURY SECRETARY

  • STEPHEN MANAGING.

  • THE PRESIDENT WAS MUCH MORE

  • COMBATIVE IN A TWEET YESTERDAY.

  • I THINK THAT CHINA FELT THAT

  • THEY WERE BEING BEATEN SO BADLY

  • IN THE RECENT NEGOTIATIONS THAT

  • THEY MAY AS WELL WAIT AROUND FOR

  • THE NEXT ELECTION, 2022C IF THEY

  • COULD GET LUCKY AND HAVE A

  • DEMOCRAT WIN.

  • IF THE WILL BECOME FAR WORSE FOR

  • THEM IF IT HAS TO BE NEGOTIATED

  • IN MY SECOND TERM.

  • THAT'S A LOT TOUGHER THAN THE

  • PRESIDENT WAS TALKING ON FRIDAY,

  • HOW COME?

  • >> Larry: LOOK, THAT'S HIS

  • VIEW.

  • WE THINK SOMETIMES CHINA MAY BE

  • MISINTERPRETING THE U.S.

  • POLITICS.

  • I DON'T WANT TO GO DEEP INTO

  • THAT, BUT I THINK THERE'S ALWAYS

  • AN ISSUE THERE.

  • THE FUNDAMENTAL THINGS AND WE'VE

  • SAID THIS MANY TIMES,

  • INTELLECTUAL PROPERTY THEFT HAS

  • TO BE FIXED.

  • FORCED TECHNOLOGY TRANSFER AND

  • OWNERSHIP OF AMERICAN COMPANIES

  • HAS TO BE FIXED.

  • CYBER INTERVENTIONS HAVE TO BE

  • FIXED.

  • TARIFF AND NONTARIFF BARRIERS

  • HAVE TO BE FIXED AND THERE HAVE

  • TO BE VERY, VERY STRONG

  • ENFORCEMENT PROVISIONS.

  • SOME OF THE CHINESE OFFICIALS

  • HAVE SAID BOTH IN BEIJING AND

  • HERE THAT THE AGREEMENT WAS TO

  • UNBALANCED.

  • THE RELATIONSHIP HAS BEEN TO

  • UNBALANCED AND BECAUSE OF THESE

  • PROBLEMS OF UNFAIR AND SOMETIMES

  • UNLAWFUL TRADING PRACTICE, WE

  • HAVE TO HAVE A VERY STRONG

  • AGREEMENT TO CORRECT, TO RIGHT

  • THESE WRONGS BEFORE WE WOULD BE

  • SATISFIED.

  • >> Chris: I WANT TO GO THROUGH

  • A QUICK CHECKLIST AND I WANT YOU

  • QUICK ANSWERS HERE, LIKE A

  • LIGHTNING ROUND ON WHERE WE

  • STAND RIGHT NOW.

  • DO YOU EXPECT CHINA TO RETALIATE

  • FOR OUR INCREASE IN TARIFFS, AND

  • HOW SOON?

  • >> Larry: I THINK I DO, BUT

  • IT'S INTERESTING, THE EXPECTED

  • COUNTERMEASURES HAVE NOT YET

  • MATERIALIZED.

  • WE MAY KNOW MORE TODAY OR EVEN

  • THIS EVENING OR TOMORROW.

  • I RECKON THEY WILL.

  • WE WILL SEE WHAT THEY COME UP

  • WITH.

  • SO FAR WE HAVEN'T HEARD ON THAT

  • BASIS.

  • >> Chris: ARE NO TALKS -- AT

  • THIS POINT IT'S TALKS WILL

  • CONTINUE, OUR NEW TALKS

  • SCHEDULED WITH CHINA?

  • >> Larry: NOT YET, BUT THE

  • CHINESE HAVE INVITED THE

  • AMBASSADOR TO COME OVER TO

  • BEIJING, SECRETARY MINH NGUYEN

  • ALSO.

  • NO CONCRETE DEFINITE PLANS YET.

  • AND BY THE BY, LET ME REPEAT THE

  • STRONG POSSIBILITY THAT THE TWO

  • PRESIDENTS WILL MEET IN JAPAN AT

  • THE G20 MEETING.

  • >> Chris: HOW LONG BEFORE

  • PRESIDENT TRUMP MAKES GOOD ON

  • HIS THREAT TO IMPOSE 25% TARIFFS

  • ON ALL THE REST OF CHINESE

  • IMPORTS INTO THIS COUNTRY,

  • BASICALLY THE FINAL $300 BILLION

  • IN CHINESE GOODS?

  • >> Larry: WE'VE ALREADY

  • LAUNCHED THAT PROCESS UP ON THE

  • WEBSITE.

  • WHAT HAPPENS IN THIS IF I GET

  • THIS RIGHT, WE WILL HAVE

  • ANNOUNCEMENTS, WE WILL HAVE

  • HEARINGS, WE WILL HAVE PUBLIC

  • COMMENTS.

  • HOW LONG DOES IT TAKE?

  • I DON'T KNOW, IT COULD BE A

  • COUPLE OF MONTHS, THEREABOUTS.

  • >> Chris: THREE OR FOUR WEEKS,

  • BUT YOU'RE SAYING IT COULD TAKE

  • LONGER.

  • >> Larry: AMONG OTHER THINGS,

  • AS I UNDERSTAND IT, A 60 DAY

  • PUBLIC COMMENTARY OR SOMETHING

  • LIKE THAT.

  • CALL IT A COUPLE MONTHS, CALL AT

  • THREE MONTHS, I DON'T KNOW.

  • THE AMBASSADOR CAN DETAIL THAT.

  • BUT THAT WILL TAKE SOME TIME AND

  • THEN OF COURSE THE PRESIDENT IS

  • GOING TO HAVE TO MAKE THE FINAL

  • DECISION ON THAT.

  • >> Chris: LET'S TALK ABOUT WHO

  • PAYS, WHO PAYS FOR THE HIGHER

  • TARIFFS ON CHINESE IMPORTS.

  • HERE'S WHAT PRESIDENT TRUMP HAD

  • TO SAY THIS WEEK.

  • >> OUR COUNTRY CAN TAKE AND

  • $120 BILLION A YEAR IN TARIFFS,

  • PAID FOR MOSTLY BY CHINA, BY THE

  • WAY, NOT BIAS.

  • A LOT OF PEOPLE TRY TO STEER IT

  • IN A DIFFERENT DIRECTION.

  • WILLIE IS ULTIMATELY PAID FOR

  • LARGELY BY CHINA.

  • >> Chris: BUT LARRY, THAT

  • ISN'T TRUE.

  • IT'S NOT CHINA THAT PAYS

  • TARIFFS, IT'S THE AMERICAN

  • IMPORTERS, THE AMERICAN

  • COMPANIES THAT PAY WHAT IN

  • EFFECT IS A TAX INCREASE AND

  • OFTENTIMES PASSES IT ON TO U.S.

  • CONSUMERS.

  • >> Larry: FAIR ENOUGH.

  • IN FACT, BOTH SIDES WILL PAY.

  • BOTH SIDES WILL PAY IN THESE

  • THINGS.

  • >> Chris: BUT THE TARIFF ON

  • GOODS COMING INTO THE COUNTRY,

  • THE CHINESE AREN'T PAYING.

  • >> Larry: KNOW, BUT THE

  • CHINESE WILL SUFFER GDP LOSSES

  • AND SO FORTH WITH RESPECT TO A

  • DIMINISHING EXPORT MARKET AND

  • GOODS THAT THEY MAY NEED.

  • >> Chris: THE PRESIDENT SAYS

  • IF THEY DON'T PAY THE TARIFFS

  • THEY MAY SUFFER CONSEQUENCES BUT

  • IT'S U.S. BUSINESSES AND U.S.

  • CONSUMERS WHO PAY, COLLECT?

  • >> Larry: YES, TO SOME EXTENT.

  • I DON'T DISAGREE WITH THAT.

  • AGAIN, BOTH SIDES WILL SUFFER ON

  • THIS.

  • >> Chris: I WANT TO PICK UP ON

  • BOTH SIDES BECAUSE LET'S LOOK AT

  • ONE STUDY THAT PROJECTS WITH THE

  • COSTS ARE OF ALL U.S. TARIFFS.

  • LOOK AT THE SCREEN.

  • THIS STUDY FOUND THAT CURRENT

  • TARIFFS, ALL CURRENT TARIFFS

  • COST AN AVERAGE FAMILY OF $4767

  • A YEAR AND CUT U.S. EMPLOYMENT

  • BY MORE THAN 900,000 JOBS.

  • AND THE STUDY FOUND IF THE

  • PRESIDENT WERE TO IMPOSE THAT

  • 25% TARIFFS EXTENDED ON ALL

  • CHINESE IMPORTS, INCLUDING THE

  • 300 BILLION, PLUS THE COST OF

  • CHINESE RETALIATION, IT WILL

  • COST AN AMERICAN FAMILY OF

  • $42,200 A YEAR, CUT THE AMERICAN

  • EMPLOYMENT BY OVER 2 MILLION

  • JOBS AND CUT GDP GROWTH BY MORE

  • THAN 1%.

  • >> Larry: I WORK ON -- I THINK

  • THOSE ARE PRETTY WILDLY

  • EXAGGERATED NUMBERS.

  • I WOULD SUGGEST THAT IF YOU GO

  • THE WHOLE BOAT, 200 BILLION

  • INCREASE FROM TEN TO 25, PLUS

  • THE OTHER 300 BILLION, WE RECKON

  • IT WOULD BE ABOUT TWO TENTHS OF

  • 1% OF GDP, SO IT'S A VERY MODEST

  • NUMBER.

  • WE HAVE A $20 TRILLION GDP.

  • IN TERMS OF POSSIBLE JOB LOSSES,

  • WE ARE WAY, WAY BELOW THAT

  • NUMBER AND I WANT TO NOTE HERE

  • THE UNITED STATES ECONOMY IS IN

  • A BOOM, THE NUMBERS ARE COMING

  • IN TERRIFIC, BETTER THAN ANYBODY

  • EXPECTED ON GROWTH, ON JOBS, ON

  • UNEMPLOYMENT, ON WAGES, ON

  • PRODUCTIVITY, WE ARE IN TERRIFIC

  • SHAPE.

  • IN ORDER TO CORRECT 20 YEARS

  • PLUS OF UNFAIR TRADING PRACTICES

  • WITH CHINA, AS I SAID, UNLAWFUL

  • TRADING PRACTICES, I THINK THIS

  • IS A RISK WE SHOULD AND CAN TAKE

  • WITHOUT DAMAGING OUR ECONOMY I

  • WILL NOTE AS OTHERS HAVE, MAYBE

  • THIS IS PART OF YOUR LIGHTNING

  • ROUND BULLETS, MAYBE THE

  • TOUGHEST BURDENS ON FARMERS.

  • THE AGRICULTURE SECTOR, WE GET

  • THERE.

  • WE HELP TO THEM.

  • LOSS EXPERTS.

  • I THINK WE HAD AN AUTHORIZATION

  • OF $12 BILLION.

  • WE WILL DO IT AGAIN IF WE HAVE

  • TO AND IF THE NUMBERS SHOW THAT

  • OUT.

  • >> Chris: ARE YOU READING

  • UPSIDE DOWN?

  • >> Larry: I'VE HAD SOME

  • EXPERIENCE.

  • WE WILL DO THAT.

  • IN A RISING ECONOMY WE ARE IN A

  • TERRIFIC AUSTERITY CYCLE BECAUSE

  • OF OUR POLICIES OF LOWER TAXES

  • AND DEREGULATION AND I MIGHT ADD

  • TRADE REFORMS.

  • WE WILL BE IN VERY GOOD SHAPE.

  • AND BY THE WAY, SOMETHING ELSE

  • THE PRESIDENT HAS SAID, LET ME

  • ADD THIS ON.

  • THE TARIFFS THEMSELVES ARE

  • PRODUCING A BIG INCREASE IN

  • CUSTOMS DUTIES, BIG INCREASE.

  • PERHAPS SOMETHING OF A MAGNITUDE

  • THIS PAST 12 MONTHS OF MAYBE

  • $25 BILLION THAT WILL HELP

  • FARMERS, THAT WILL HELP THE

  • TRANSITION.

  • YOU'VE GOT TO DO WHAT YOU GOT TO

  • DO.

  • WE HAVE HAD UNFAIR TRADING

  • PRACTICES ALL THESE YEARS AND SO

  • IN MY JUDGMENT, THE ECONOMIC

  • CONSEQUENCES ARE SO SMALL THAT

  • THE POSSIBLE IMPROVEMENT IN

  • TRADE AND EXPORTS AND OPEN

  • MARKETS FOR THE UNITED STATES,

  • THIS IS WORTHWHILE DOING.

  • >> Chris: OKAY.

  • THE LAST LINK -- I'M IN NO WAY

  • QUESTIONING THE WISDOM OF

  • DECIDING TO TAKE ON -- THERE'S

  • NO QUESTION THAT THIS HAS BEEN

  • AN UNEQUAL, UNFAIR RELATIONSHIP

  • IN TRADE BETWEEN U.S. AND CHINA.

  • THE LAST THING I WANT TO GET TO

  • IS THE QUESTION OF HOW

  • DETERMINED PRESIDENT TRUMP IS TO

  • SEE THIS THROUGH BECAUSE HE

  • CLEARLY HAD AN EXPECTATION.

  • IF YOU GOT TOUGH WITH CHINA ON

  • TARIFFS, THAT BASICALLY THEY

  • WERE GOING TO CAVE AND THERE WAS

  • GOING TO BE A DEAL AND

  • EVERYTHING WAS GOING TO BE GREAT

  • AND HE COME AS OPPOSED TO EVERY

  • OTHER PRESIDENT, WAS GOING TO

  • RESET THE RELATIONSHIP.

  • THAT IS NO LONGER SO CLEAR AND I

  • GUESS MY QUESTION IS HOW LONG

  • HAS PRESIDENT TRUMP PREPARED TO

  • WAGE THIS TRADE WAR WITH CHINA,

  • WHICH CLEARLY HAS COSTS TO THE

  • AMERICAN ECONOMY AND CONSUMERS

  • AND BUSINESSES?

  • >> Larry: I DON'T KNOW.

  • CAN I SUBSTITUTE TRADE

  • NEGOTIATION FOR TRADE WERE?

  • AFTER ALL, WE ARE TALKING, WE

  • WILL TALK SOME MORE.

  • >> Chris: UNDERSTAND BUT GIVE

  • TARIFFS ON THEN, WE HAVE TARIFFS

  • THEM.

  • VASTLY INCREASED.

  • IT'S NOT A NEGOTIATION.

  • >> Larry: IT IS A NEGOTIATION

  • AND PART OF THE NEGOTIATION IS

  • TAKING ACTION.

  • >> Chris: BUT ANSWER MY

  • QUESTION.

  • SINCE IT --

  • >> Larry: ONE THINGS I WANT.

  • ONE OF THE THINGS I'VE LEARNED

  • ON THE PRESIDENT TRUMP IS THAT

  • TARIFFS ARE PART OF NEGOTIATION

  • NEGOTIATIONS.

  • AND THEY SHOW THAT WE DO MEAN

  • BUSINESS AND WE WILL TAKE

  • ACTION.

  • CHRIS, AGAIN -- WE HAVE BEEN ON

  • THE WRONG SIDE --

  • >> Chris: ARE YOU -- OR HOW

  • LONG IS HE PREPARED TO CONTINUE

  • THIS EFFORT AND KEEP THESE

  • TARIFFS ON?

  • >> Larry: I WOULDN'T WANT TO

  • PUT A TIMETABLE ON IT.

  • I WOULD JUST SAY AS HE HAS

  • TWEETED AND HAS SAID TO US AND

  • SAID TO THE CHINESE, WE ARE

  • CONTINUING OUR DISCUSSIONS,

  • THAT'S A VERY GOOD THING.

  • NEGOTIATIONS YOU KNOW OVER TIME

  • STOP, GO, STOP, GO.

  • THE SPEED MAY BE PASSED TO MY

  • FAST WITH THE SPEED MAY BE SLOW.

  • THIS IS NOT AT ALL UNUSUAL.

  • >> Chris: ARE YOU SUGGESTING

  • THERE MIGHT BE A CERTAIN POINT

  • WHERE HE GOES THIS ISN'T WORTH

  • THE ECONOMIC COST AND POLITICAL

  • COST AND PULLS BACK?

  • >> Larry: I DON'T WANT TO

  • SECOND-GUESS THAT -- I DON'T

  • WANT TO PUT TIMETABLES, THAT'S

  • COMPLETELY UP TO THE PRESIDENT.

  • >> Chris: BUT YOU'RE NOT

  • PULLING IT OUT?

  • >> Larry: I THINK THE

  • ECONOMIC -- THE POTENTIAL

  • ECONOMIC GAINS OF A GOOD DEAL

  • THAT OPENS UP CHINA, MAKES THEM

  • LEGAL TRADE PARTNERS, THOSE

  • GAINS ARE HUGE, SO THAT'S A

  • COST-BENEFIT ANALYSIS THAT I

  • REALLY LIKE.

  • POLITICALLY I THINK THE COUNTRY

  • IS COMPLETELY BEHIND THE

  • PRESIDENT AND HIS TOUGH APPROACH

  • ON CHINA AND IN FACT AS YOU

  • KNOW, LEADING DEMOCRATS SUCH AS

  • SENATOR SCHUMER AND OTHERS HAVE

  • SUPPORTED THE PRESIDENT IN THIS

  • BATTLE.

  • I THINK -- SOMETIMES YOU CAN DO

  • THE RIGHT THING AND IN A SENSE,

  • THIS IS A BIPARTISAN POLICY AND

  • IT'S LONG OVERDUE.

  • SO LET ME REPEAT MY POINT --

  • >> Chris: WE DON'T HAVE TIME

  • FOR YOU TO REPEAT.

  • >> Larry: WORTH DOING, WE HAVE

  • TO CHANGE THE TRADING

  • RELATIONSHIP BETWEEN TWO

  • COUNTRIES FOR THE BENEFIT OF THE

  • UNITED STATES AND ITS WORKFORCE

  • AND ITS RANCHERS AND FARMERS AND

  • SO FORTH, WE HAVE TO DO THIS.

  • THE PRESIDENT IS SPOT ON.

  • >> Chris: LARRY, THANK YOU,

  • THANKS FOR YOUR TIME.

  • I MUST SAY I HOPE YOU ENJOY OUR

  • CONVERSATIONS AS MUCH AS I DO.

\"FOX NEWS SUNDAY\" .\"

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