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Cohn's departure silences important White House voice for free trade
Washington: Gary Cohn is a Democrat, but his resignation as director of the White House National Economic Council has actually underscored the fundamental divide between President Donald Trump and his fellow Republicans as the Trump seeks to raise barriers to foreign trade.
From his perch in the West Wing, Cohn in effect served as a proxy for the business wing of the Republican Party as it fought what may be a losing battle against new tariffs on steel and aluminum imports. His departure deprives free trade proponents of perhaps their strongest voice inside Trump's inner circle.
Trade has always been the Iron Curtain that divided Trump and establishment Republicans.
The president argues that other countries have run roughshod over the United States when it came to the exchange of goods and services, while most Republican leaders in Washington maintain that in fact lower barriers have helped keep the US the world's leading economic powerhouse.
Until Trump's signature tax-cut plan was passed in December, that schism was largely papered over in the name of unity as Republicans focused on lowering rates for corporations, wealthy Americans and middle-class families. But the rift over trade has taken centre stage in the days since Trump roiled markets and international relations by declaring he would impose tariffs of 25 percent on foreign steel and 10 percent on foreign aluminum.
Trump finds himself at odds with his party's leaders in Congress, such as House Speaker Paul Ryan and Senator Orrin Hatch, the chairman of the powerful Senate Finance Committee, both of whom have long records supporting free trade. Hatch, who once delighted Trump by saying that he was on the way to making his "the greatest presidency" in history, has broken sharply with the White House over tariffs.
In a sharply worded letter sent to Trump on Tuesday, Hatch said the proposed tariffs would be paid by American manufacturers and consumers, not foreign firms, and would undercut "the overwhelming and immediate success" of the tax cuts.
"Put simply, the proposed tariffs on steel and aluminum imports threaten to undermine that success," he wrote.
Trump even faced criticism of his proposed tariffs in person on Tuesday as he hosted Prime Minister Stefan Lofven of Sweden.
"Swedish prosperity is built on cooperation, competitiveness and free trade, and I am convinced that increased tariffs will hurt us all in the long run," the prime minister told reporters as Trump stood next to him at the White House.
Cohn, a former Goldman Sachs banker, had become the most prominent target of trade skeptics on the right such as Steve Bannon, the president's former chief strategist. Breitbart News, once headed by Bannon, regularly included an illustration of a globe next to Cohn's name to mock him as a globalist.
"Policy differences are inevitable in any administration. That's why White House process is so important," said Douglas Holtz-Eakin, the president of the American Action Forum and a Republican economics adviser. "The process on the tariff issue appears to have been both chaotic and stacked against Cohn's view."
Sceptics of free trade wasted no time mourning Cohn's departure.
"The average guy voter Trump seems to aim at ... seems as happy as a clam with the tariffs," said Clyde Prestowitz, the author of The Betrayal of American Prosperity.
While Trump's views on many issues have been flexible or evolved over the years, his conviction that the United States was being shafted has been a core principle going back decades, long before he first ran for president.
It is an article of faith that has informed his view of trade pacts, tariffs and manufacturing and that helped him tap into populist discontent during the presidential campaign in 2016, particularly in traditionally Democratic states in the Midwest.
"I was elected, at least partially on this issue," Trump said on Tuesday. "And I've been saying it for 25 years: Our country's been taken advantage of by everybody, by everybody — almost everybody. And we cannot let that happen any longer ... so we're not going to let it happen."
The disagreement on trade has hovered in the background through much of Trump's tenure, but a showdown with Republicans had largely been put off since the president had talked about the issue more than he had taken action.
He pulled out of the Trans-Pacific Partnership, a 12-nation trade deal negotiated by President Barack Obama, but the agreement had never been ratified by Congress and seemed unlikely to be. Trump has threatened to scrap the North American Free Trade Agreement with Mexico and Canada, but backed off in favor of negotiations that so far have not yielded consensus. He has likewise suggested he would withdraw from a trade deal with South Korea but so far has not followed through.
In one of the most tangible actions he has taken, Trump slapped steep tariffs on foreign washing machines and solar energy panels in January, generating protests from domestic manufacturers and protests from other business leaders. But he followed up days later with a friendly speech to investors and corporate chieftains gathered in Davos, Switzerland, the ground zero for globalization and free trade, a speech written largely by Cohn.
In the end, though, Cohn could not head off the steel and aluminum tariffs, suggesting that the nationalist side of the White House had finally prevailed over his resistance.
New York Times