It’s been a long time since the liberal media was so enthusiastic about a Goldman Sachs guy. The reaction to economic advisor Gary Cohn’s exit from the Trump White House was dramatic: the sky (and the market) is falling, again.
CNBC, as an example, ran with this headline: “Wall Street should be afraid of what Trump does next after Cohn’s departure.”
In other words, investors fear that Gary Cohn’s departure from the Trump administration puts the entire western liberal globalist construct in peril, and President Trump’s program to “Make America Great Again” is to blame.
For the record, there were more than a few of us Trump supporters who were not excited about Cohn, a registered Democrat, taking on the leadership of the National Economic Council in the first place. Among Wall Street rivals, Cohn is viewed as a hardball player. Among the politically connected, he is a middle-left establishment Wall Street titan.
Cohn was not in sync with a number of Trump’s policies. Not only was he off the reservation on trade, utterly opposed to the tariffs on steel and aluminum announced last week, he was also an advocate of the Paris climate accord.
Many conservatives rightly see that agreement as an effort to buttress President Obama’s sparse foreign policy achievements and one that sold the U.S. — and especially our comparative advantage in energy — down the river.
That said, Cohn’s contributions to the Trump administration were significant. He was a forceful presence who was unafraid of arguing his case, which any president needs.
He also, critically, supplied the Trump White House with the energy, muscle and organizational discipline needed to pass the tax cuts. As the president looks to roll out other programs, such as infrastructure, he will be missed.
Cohn also backed (and perhaps refined) Trump’s “America First but Not Alone” message. He was helpful in crafting the president’s well-received foreign policy positions and in organizing Trump’s successful ventures overseas.
He even penned, with National Security Advisor H.R. McMaster, an op-ed in the Wall Street Journal clarifying and celebrating Trump’s efforts.
It is over tariffs that Cohn and the president evidently parted ways. Cohn represents the establishment (and majority) view that the 25-percent tariff on steel and 10-percent tariff on aluminum is bad policy. Critics of the program argue it could ignite a trade war.
Already, the EU and others have threatened retaliatory measures on U.S. exports like Harley Davidson motorcycles and bourbon. The Chamber of Commerce folks are up in arms, since international markets and cheap foreign labor are essential to their growth.
But Trump is not wrong that we have allowed foreign countries, especially China, easy access to our markets while demanding little in the way of reciprocity. We impose much lower average tariffs on goods coming into our country than our producers face trying to export elsewhere.
This has been the case for decades, but it has only been in recent years, as our manufacturers shipped millions of jobs overseas, that the imbalance became a political debate.
China has in particular taken advantage of our industries’ desire to enter that growing market. After a visit to Beijing, Commerce Secretary Wilbur Ross described China as “one of the most” protectionist countries in the world.
With President Xi Jinping rolling out his ambitious “Made in China 2025” program, targeting self-sufficiency in numerous top industries, China is poised to become even more aggressive.
President Trump is not alone in thinking that the U.S. has been complacent for too long, and that it is time to push back — not only on China, but with other countries that run large surpluses with the U.S. due to unequal trade barriers. Tougher enforcement of existing trade schemes and reworking our existing deals are part of that program.
Indeed, we are in the midst of conversations with numerous partners to that exact end. We just finished the seventh round of NAFTA renegotiations and are also in discussions with both the Chinese and with South Korea.
It seems quite possible that the president levied the hefty tariffs on steel and aluminum as a negotiating position, but we do not yet know. It is likely that the final program is more nuanced and targeted, which would be a positive outcome for workers and investors.
The dispute over tariffs and trade policy may not be the only reason for Cohn’s departure. Others have suggested he was bored and looking for a bigger job in the White House. Axios reported that he had recently told Chief of Staff John Kelly, “I’m working at like 20% of my capacity.”
Ironically, he had been rumored as a possible chief of staff should John Kelly step aside. There was also speculation a few months ago that he might be a candidate to replace Janet Yellen as head of the Federal Reserve Board, but that did not pan out.
Cohn can return to Wall Street and pursue a job that occupies more of his brain. President Trump needs to replace him with someone equally capable, who shares the president’s ambitions and his policies, and let the agenda roll on.
Published on The Hill