Gary Cohn, President Trump’s top economic advisor, resigned after a tete-a-tete with Trump over the president’s recent decision to place tariffs on foreign steel and aluminum (amongst other items):
Gary Cohn, Donald Trump’s top economic adviser, has resigned after losing a heated White House battle over trade, dealing a major blow to administration officials and congressional Republicans seeking to rein in the president’s plan to impose harsh tariffs on steel and aluminium imports.
In a statement on Tuesday, the White House said Mr Cohn, the former number two at Goldman Sachs who had served as head of Mr Trump’s National Economic Council since he took office in January 2017, would be leaving in the coming weeks.
The school of thought was that tariffs on steel and aluminum would start a trade war with China. In actuality, the U.S. imports more steel and aluminum from allies like Europe, Canad and South Korea than it does from China. The president later divulged that the EU has sizeable tariffs on U.S. automobiles which has insulated foreign automakers at the expense of American car manufacturers. Nonetheless, a trade war sounds good until it has unintended consequences like hurting U.S. companies.
Trade tariffs are so wrong-headed and nonsensical that the Shock Exchange assumed Trump would back off his rhetoric. He has often taken to Twitter to engage in saber rattling only to backtrack or change his mind later. The Shock Exchange thought this would be another one of those head fakes. After all, a trade war could hurt U.S. businesses and drive the stock market down where wealthy people have parked their money. At Trump And The Global Economy town hall in November Professor Lance Brofman explained the folly of trade wars and their unintended consequences. The Shock Exchange assumed Trump and Cohn were listening. Trump, Obama, Janet Yellen, Ben Bernanke, Draghi, Kuroda, Merkel, et. al have made it their mission to help the investor class. Why would Trump change course now.
Dow Jones futures were off over 300 points late Tuesday night, signaling the market was not happy with his departure. The fact that Trump let Cohn walk and kept up with this trade war rhetoric likely meant he was actually going through with this nonsense. Tax cuts to the rich was bad enough, but Trump may have trumped himself (pun intended) this time.