Gary Cohn, the top economic adviser to US President Donald Trump and a voice for Wall Street in the White House, said on Tuesday, 6 March, that he would resign, a move that came after he lost a fight over Trump's plans for hefty steel and aluminum import tariffs.
The departure of Cohn, the National Economic Council director, expected to be finalized in a few weeks, will blow a hole in Trump’s advisory team at a time when the economy is growing but stock markets are experiencing surges of volatility.
Trump said in a tweet on Tuesday night he "will be making a decision soon" on replacing Cohn. Administration officials said Peter Navarro, who is director of the White House National Trade Council, and conservative commentator Larry Kudlow were the "top two candidates" for the job.
White House officials said the tariffs dispute contributed to Cohn’s decision to leave but was not the sole reason.
One official cited several issues and noted: “His biggest mission was on the tax cut bill, which he got passed.”
It was the latest in a series of recent high-profile departures from the White House.
Cohn told Trump about his decision to resign on Tuesday, but he and the president had been discussing his possible departure for weeks, a White House official said.
Following the news, the U.S. dollar weakened, while an exchange-traded fund tracking the broad market S&P 500 dipped 1 percent. Prices for US government debt barely budged, with analysts expressing concern about trading on Wednesday.
"One of the adults in the room has left. The markets will worry that this is a signal that we will definitely go ahead with these tariffs," said Paul Mortimer-Lee, chief market economist at BNP Paribas corporate and investment banking.
"Cohn was seen as a moderating influence, and now he’s gone. The president’s ear is going to be dominated by louder and louder protectionist voices,” said Mortimer-Lee in New York.
Without Cohn in the picture, Navarro, an economist, will likely have a clearer field to pursue a protectionist agenda, which squares with Trump's long-held concerns about trade.
Trump said last week he would impose import tariffs of 25 percent on steel and 10 percent on aluminum, a move criticised by a number of prominent Republican lawmakers.
Trump's announcement followed an intense debate within the White House between Cohn and Navarro and their respective allies, said White House officials.
"It looks like Gary Cohn has been completely unsuccessful in trying to stop the steel and aluminum tariffs," said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, a think tank.
Cohn’s departure indicated Trump would proceed with the tariffs, de Bolle said. "The chances of us having a trade war have now increased dramatically... The economic nationalists now certainly have the upper hand,” she added.
Cohn, Man Who Helped Drive Tax Overhaul
Cohn, 57, who served in the White House for a little more than a year, achieved an early rapport with Trump and proved influential in the administration's decisions last April not to label China a currency manipulator and to renegotiate the North American Free Trade Agreement, instead of terminating it.
He also emerged as a main driver of a sweeping tax overhaul passed by Congress in December and signed into law by Trump. The overhaul was Trump's only major legislative victory of 2017.
After the tax package was approved, Cohn tackled an infrastructure initiative, but it has been slow to gain traction and will likely be further handicapped by his departure.
“It has been an honor to serve my country and enact pro-growth economic policies to benefit the American people, in particular the passage of historic tax reform,” Cohn said in a statement issued by the White House.
"I am grateful to the president for giving me this opportunity and wish him and the administration great success in the future," said Cohn.
His relationship with Trump began to sour in mid-2017 after Cohn disagreed with the president’s tepid response to clashes between neo-Nazis and anti-racism protesters in Charlottesville, Virginia, sources close to Cohn said.
Cohn, a Democrat, aligned himself in the constantly shifting White House power structure with Trump's son-in-law, Jared Kushner, and the president's daughter Ivanka Trump. Like Cohn, both are seen as centrists.
Formerly president and chief operating officer of investment bank Goldman Sachs, Cohn was viewed as a bulwark against protectionism. Business lobbyists frequently cited Cohn as their strongest ally in the White House.
In a statement, Trump gave Cohn credit for his role in pushing the tax package through Congress and "unleashing the American economy once again."
"He is a rare talent, and I thank him for his dedicated service to the American people," he said.
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