In the latest White House upheaval, President Trump’s chief economic advisor, Gary Cohn, is stepping down after failing to dissuade the president from plans to impose sweeping tariffs on imported metals.
Cohn’s resignation as director of the National Economic Council, a powerful agency with broad oversight over White House policy, suggests that Trump’s plans to levy 25% tariffs on steel and 10% on aluminum will be formalized shortly. That comes despite stern warnings from Cohn, congressional Republicans, businesses and foreign governments that such across-the-board tariffs could hurt the U.S. economy, drive up prices for American consumers and lead to a trade war.
As news of Cohn’s departure broke Tuesday evening, stock market futures plunged. Cohn, the former president of Goldman Sachs, is popular on Wall Street, where he has been seen as a restraining influence against Trump’s protectionist leanings. Cohn is expected to leave his post in the coming weeks.
From the early days of the Trump administration, Cohn, 57, and other so-called globalists in the West Wing, battled against nationalists in the administration who pressed the president to carry out his campaign promises to take aggressive protectionist actions to upend the status quo on trade.
Cohn, a Democrat, had a major role in pushing through the Republican tax cuts. But he saw his clout waning as Trump grew increasingly impatient about his administration’s lack of hard actions on trade. That culminated in the president’s off-the-cuff announcement of tariffs on Thursday, which took GOP leaders and even many in the White House by surprise.
Trump thanked Cohn for his service, saying in a statement that he “did a superb job in driving our agenda, helping to deliver historic tax cuts” and that he is a “rare talent.”
Cohn, in a statement released by the White House, expressed gratitude to the president for the opportunity to serve and to “enact pro-growth economic policies to benefit the American people, in particular the passage of historic tax reform.”
But Cohn clearly saw the metals tariffs and other trade actions being contemplated by the White House as risks to economic growth. He had planned to gather business executives on Thursday in a last-ditch effort to persuade Trump to pull back from issuing the tariff order. That meeting has been canceled.
Cohn’s departure is the latest in a string of high-profile departures from a White House that has suffered more turnover in its first year than any administration in recent memory. But Cohn’s exit stands out because he is parting over a policy dispute with the president, rather than amid a scandal or allegations of misconduct.
It came on a day when Trump tried to downplay the turmoil in his White House, contending earlier Tuesday on Twitter that there was no “chaos.” During an afternoon news conference with the Swedish prime minister, Trump, perhaps trying to preemptively ease concerns about Cohn’s impending departure, disputed several reports that the White House is struggling to recruit talented, experienced people.
“Believe me, everybody wants to work in the White House,” Trump said. At the same time, he acknowledged tensions among his advisors and said he prefers it that way.
“I like conflict,” Trump said. “I like having two people with different points of view, and I certainly have that. And then I make a decision. But I like watching it, I like seeing it, and I think it's the best way to go.”
In recent days, a resurgence of Trump’s trade advisor Peter Navarro, who shares Trump’s hard-line positions, particularly those related to China, was a telltale sign that the president had decided to side with the nationalist wing in his administration — and may have been the last straw for Cohn.
Cohn was tapped by Trump early on for his Wall Street smarts and connections to the financial world, and in the first year of Trump’s presidency, Cohn had considerable pull. For example, he blocked a proposal to officially terminate talks with the Chinese on an investment treaty before it landed on Trump’s desk.
But last August, Cohn came close to resigning after Trump said that “both sides” were responsible for a deadly protest in Charlottesville, Va., against white supremacists and neo-Nazis. Cohn, who is Jewish, decided to stay on in the hopes that he could help the administration do better. There had even been reports that Trump might consider him as a future chief of staff.
On taxes, Cohn worked closely with Treasury Secretary Steven T. Mnuchin, who appeared to side with Cohn on international economic issues. The Treasury, for example, declined to label China a currency manipulator, even though Trump promised to make it one of his first moves.
Despite his campaign pledge to overhaul trade policies, Trump so far has taken few notable steps on trade, apart from formally withdrawing from the Trans-Pacific Partnership, launching renegotiations of the North American Free Trade Agreement and opening talks to revise the U.S. pact with South Korea.
But many analysts expect Trump to focus on trade this year, and it was becoming increasingly clear that the president was giving more credence to the views of advisors such as U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross, who pushed for the steel and aluminum tariffs, as well as Navarro.
In recent weeks, Cohn had been seen less often in public appearances with the president. He was notably absent Tuesday from the president’s joint news conference at the White House with Swedish Prime Minister Stefan Lofven.
John F. Kelly, Trump’s chief of staff, praised Cohn. “Gary has served his country with great distinction, dedicating his skill and leadership to grow the U.S. economy and pass historic tax reform.”
“I will miss having him as a partner in the White House, but he departs having made a real impact in the lives of the American people,” Kelly said.
Joshua Feinman, chief economist and managing director at Deutsche Asset Management in New York, said he wasn't entirely surprised by Cohn's resignation given the internal battle in the White House.
But he said it was "not good news” because Cohn was "viewed on Wall Street and in the business community in general as a steady influence, someone with a lot of expertise in financial markets."
But those who have been urging Trump to get tough on trade were not sorry to see Cohn go.
“That his departure would be spurred over a trade policy dispute reveals that his years on Wall Street at Goldman Sachs apparently made his one unbending principle the defense of the corporate-managed trade policies," said Lori Wallach, director of Public Citizen’s Global Trade Watch. She said those policies have cost American jobs and hurt wages.