Gary Cohn’s Exit Prompts Alarm Among Business Leaders
US Chamber of Commerce ‘very concerned about the increasing prospects of a trade war’
Gary Cohn and President Donald Trump during a press conference with cabinet members and Republican leadership at Camp David in Thurmont, Maryland, on January 6, 2018 © Bloomberg
Sam Fleming and Shawn Donnan in Washington and James Fontanella-Khan in New York
Financial Times
The resignation of Donald Trump’s top economic adviser sent a shudder through global markets and prompted alarm among corporate leaders on Wednesday as business braced for the White House to pursue further protectionist measures.
Leading corporate lobbyists in Washington said the departure of Gary Cohn, a centrist force in the White House policy maelstrom, could endanger the economic gains flowing from recent corporate tax cuts and undercut US leadership if it leads to more aggressive actions on trade.
Despite the warnings from investors and corporate interests, the administration said it would press on with imposing tariffs on steel and aluminium imports, which are championed by Cohn rivals Peter Navarro, White House trade adviser, and commerce secretary Wilbur Ross.
“We are definitely going to end up with these tariffs and we are going to roll this out very, very quickly,” Steven Mnuchin said of the steel and aluminium measures on Wednesday. The Treasury secretary also told Fox Business there would be a process for businesses to seek exemptions from the president.
Mr Cohn’s announcement rattled equity investors around the world, with European markets selling off sharply before recovering in late trading while Hong Kong’s Hang Seng closed down 1 per cent. The S&P 500 dropped as much as 1 per cent in morning trading before staging a recovery.
Washington’s largest business lobby, the US Chamber of Commerce, said it was “very concerned about the increasing prospects of a trade war” following the departure of Mr Cohn, a former president of Goldman Sachs who vigorously opposed the tariff measures.
“Alienating our strongest global allies amid high-stakes trade negotiations is not the path to long-term American leadership,” said Thomas Donahue, the chamber’s president, calling for the administration to refrain from worldwide tariffs that it said would harm US manufacturers.
Joshua Bolten, the president of the Business Roundtable group, said Mr Cohn’s departure was “a real loss for President Trump and the American people”.
The corporate broadsides came at the same time US Steel delivered a boost to the president by saying it would reopen idled operations at its Granite City Works in Illinois, adding that the move was prompted by the promised tariffs.
Mr Trump's tariffs plan, while appealing to his Rust Belt base, is not popular nationally. A Quinnipiac University poll this released this week found 50 per cent of US voters were opposed and almost two-thirds disagreed with the president's contentions that trade wars were both good and easy to win.
“This is a dangerous time for trade,” said Steve Moore, a former adviser to the Trump campaign who is now a visiting fellow at the Heritage Foundation. He said Mr Cohn was not irreplaceable and Mr Trump’s decision on tariffs had been predictable given his campaign pledges. But he added: “The economy is firing on all cylinders, so why disrupt it with this policy?”
Mr Trump is expected to put his signature on the steel and aluminium tariffs by the end of the week after a heated internal debate that prompted Mr Cohn's exit. The president also is preparing a separate action on intellectual property against China that he said his administration was "acting swiftly" on.
In a tweet, Mr Trump said his administration had asked China to develop a plan to reduce the US trade deficit by $1bn this year. Last year the US had a $375bn deficit in goods with China and new trade data released on Wednesday showed the US had a $35bn deficit with China in January alone.
Several New York dealmakers expressed their concern over the departure of Mr Cohn from the Trump administration as they bemoaned the loss of “the last sane voice” inside the White House.
The head of merger and acquisitions at a large investment bank said Mr Cohn should be treated as a hero for serving under Mr Trump at a time when most of Wall Street thought it would be toxic to work with an unpredictable leader.
“Gary really served the American people and ultimately gave us a great tax reform,” the banker said. “Now we should brace ourselves for some more stupid policies . . . Trump unfiltered is scary.”
Additional reporting by Andrew Edgecliffe-Johnson in New York
Gary Cohn and President Donald Trump during a press conference with cabinet members and Republican leadership at Camp David in Thurmont, Maryland, on January 6, 2018 © Bloomberg
Sam Fleming and Shawn Donnan in Washington and James Fontanella-Khan in New York
Financial Times
The resignation of Donald Trump’s top economic adviser sent a shudder through global markets and prompted alarm among corporate leaders on Wednesday as business braced for the White House to pursue further protectionist measures.
Leading corporate lobbyists in Washington said the departure of Gary Cohn, a centrist force in the White House policy maelstrom, could endanger the economic gains flowing from recent corporate tax cuts and undercut US leadership if it leads to more aggressive actions on trade.
Despite the warnings from investors and corporate interests, the administration said it would press on with imposing tariffs on steel and aluminium imports, which are championed by Cohn rivals Peter Navarro, White House trade adviser, and commerce secretary Wilbur Ross.
“We are definitely going to end up with these tariffs and we are going to roll this out very, very quickly,” Steven Mnuchin said of the steel and aluminium measures on Wednesday. The Treasury secretary also told Fox Business there would be a process for businesses to seek exemptions from the president.
Mr Cohn’s announcement rattled equity investors around the world, with European markets selling off sharply before recovering in late trading while Hong Kong’s Hang Seng closed down 1 per cent. The S&P 500 dropped as much as 1 per cent in morning trading before staging a recovery.
Washington’s largest business lobby, the US Chamber of Commerce, said it was “very concerned about the increasing prospects of a trade war” following the departure of Mr Cohn, a former president of Goldman Sachs who vigorously opposed the tariff measures.
“Alienating our strongest global allies amid high-stakes trade negotiations is not the path to long-term American leadership,” said Thomas Donahue, the chamber’s president, calling for the administration to refrain from worldwide tariffs that it said would harm US manufacturers.
Joshua Bolten, the president of the Business Roundtable group, said Mr Cohn’s departure was “a real loss for President Trump and the American people”.
The corporate broadsides came at the same time US Steel delivered a boost to the president by saying it would reopen idled operations at its Granite City Works in Illinois, adding that the move was prompted by the promised tariffs.
Mr Trump's tariffs plan, while appealing to his Rust Belt base, is not popular nationally. A Quinnipiac University poll this released this week found 50 per cent of US voters were opposed and almost two-thirds disagreed with the president's contentions that trade wars were both good and easy to win.
“This is a dangerous time for trade,” said Steve Moore, a former adviser to the Trump campaign who is now a visiting fellow at the Heritage Foundation. He said Mr Cohn was not irreplaceable and Mr Trump’s decision on tariffs had been predictable given his campaign pledges. But he added: “The economy is firing on all cylinders, so why disrupt it with this policy?”
Mr Trump is expected to put his signature on the steel and aluminium tariffs by the end of the week after a heated internal debate that prompted Mr Cohn's exit. The president also is preparing a separate action on intellectual property against China that he said his administration was "acting swiftly" on.
In a tweet, Mr Trump said his administration had asked China to develop a plan to reduce the US trade deficit by $1bn this year. Last year the US had a $375bn deficit in goods with China and new trade data released on Wednesday showed the US had a $35bn deficit with China in January alone.
Several New York dealmakers expressed their concern over the departure of Mr Cohn from the Trump administration as they bemoaned the loss of “the last sane voice” inside the White House.
The head of merger and acquisitions at a large investment bank said Mr Cohn should be treated as a hero for serving under Mr Trump at a time when most of Wall Street thought it would be toxic to work with an unpredictable leader.
“Gary really served the American people and ultimately gave us a great tax reform,” the banker said. “Now we should brace ourselves for some more stupid policies . . . Trump unfiltered is scary.”
Additional reporting by Andrew Edgecliffe-Johnson in New York
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