WASHINGTON, U.S. - Gary Cohn, the man who was appointed to become an influential voice on economic decisions in the White House, resigned on Tuesday, amid what the media dubbed a major internal clash over U.S. President Donald Trump’s trade policies.
However, as Cohn announced his plans to quit as Trump's top economic adviser, the White House and Trump administration launched a resounding cry to reassure businesses and the market in general that his departure would not send Trump’s economic team in disarray.
On Wednesday, as the news rocked the stock market and several questions were raised regarding the real reason for Cohn’s ouster, Trump continued to stick to his guns over the controversial trade policy.
The U.S. President defended his controversial tariff plan on Wednesday and said on Twitter, “From Bush 1 to present, our Country has lost more than 55,000 factories, 6,000,000 manufacturing jobs and accumulated Trade Deficits of more than 12 Trillion Dollars. Last year we had a Trade Deficit of almost 800 Billion Dollars. Bad Policies & Leadership. Must WIN again! #MAGA.”
Yet, his administration continued to deny that Cohn’s departure leaves the president’s economic team in disarray and several officials praised the contributions made by Trump’s top economic adviser.
The Treasury Secretary, Steven Mnuchin, who, like Cohn, worked at Goldman Sachs and is part of the diminished “globalist” wing of the administration said in a statement, “I’ve known Gary for a long time. He has been a terrific partner in working here on tax reform and other things.”
Mnuchin added, “As you know, there was a lot of speculation after tax reform whether he’d stay or not and Gary decided to move on. But we have a terrific economic team here. And we’re going to consistently execute the president’s strategy.”
Further, Mnuchin defended Trump’s planned trade tariffs of 25 percent on steel and 10 percent on aluminium.
He, however, raised the prospect of exceptions for certain countries.
The country’s Treasury Secretary said, “The president is determined that we maintain the steel industry. This is not new. Other presidents have done similar types of things. So let me just remind you, this is not the first time this has ever been done. And we’ve done a careful analysis and looking at this. And as I said, we have a mechanism to carve out countries. We’ll consider these things. And we’re moving forward with the ability to do this on steel and aluminum and move forward with our strategy.”
Meanwhile, the White House press secretary, Sarah Sanders claimed that Cohn had been considering resigning “for quite some time” and declined to be drawn on his successor.
She said, “Obviously I’m going to let the president make that announcement, but he’s got a number of people that he can choose from. But in the meantime, Gary will still be here as a voice for the next several weeks and we’ve got some great people from the economic community that help guide on this, whether it’s Secretary Mnuchin, Secretary Ross, Kevin Hassett, a number of other people that will continue to be strong voices to help lead the president on making decisions about the economy.”
Sanders told reporters that an announcement on tariffs is expected by the end of the week and added, “It’s a complicated process, and we want to make sure every I is dotted and all Ts are crossed.”
Trump’s announcement on the planned tariffs has already triggered a fierce backlash from allies such as Britain, Canada and the European Union and leading Republicans like Paul Ryan, the party’s most senior figure in House of Representatives.
However, Democrats, who have so far, protested against many of Trump’s key plans, were more critical of Trump’s tariff proposal execution but not the President’s instinct overall.
On Wednesday, the Democratic Senate leader Chuck Schumer told reporters that he agrees “wholeheartedly” with Trump’s desire to go after China.
However, he faulted the White House for a plan that he said hurts trading partners who are not “rapacious in their trading” such as Canada and countries in western Europe.
Schumer also urged Trump to follow through on his threat to go after China.
Schumer said, “They ought to not let all of these academics who just say anytime you try to do anything on trade it’s protectionist. They ought to not let that deter them. But they ought to put together a real plan that works.”
Meanwhile, the departure of Cohn as the National Economic Council director, a role in which he had been an interlocutor between the Trump administration and the business community, is certainly set to leave the White House without a financial heavyweight.
Cohn had served as a counter to Trump’s protectionist impulses by business executives and as a moderating force in the administration by foreign leaders.
In his statement, Cohn said, “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. I am grateful to the President for giving me this opportunity and wish him and the Administration great success in the future.”
His departure saw stock markets drop amid fears that the president is increasing reliance on protectionist advisers.
After Cohn announced he was leaving after losing a battle over steel tariffs, U.S. stocks were sinking as investors worried that more protectionist trade policies are on the way.
The Standard & Poor's 500 index fell 15 points, or 0.6 percent, to 2,712 as of 2:20 p.m.
The Dow Jones fell more than 300 points, around 1 percent.
The Nasdaq composite slid 8 points, or 0.1 percent, to 7,363.
Stocks were low all day and fell further after Trump said the government is "acting swiftly on intellectual property theft."
The Russell 2000 index of smaller-company stocks added 5 points, or 0.3 percent, to 1,567.
Aerospace company Boeing lost $4.01, or 1.1 percent, to $344.91.
Construction equipment maker Caterpillar gave up $3.54, or 2.3 percent, to $150.21.
Farm equipment maker Deere shed $2.55, or 1.6 percent, to $155.96.
Benchmark U.S. crude dropped $1.48, or 2.4 percent, to $61.12 a barrel in New York after the Energy Department reported that U.S. oil production rose last week.
Brent crude, used to price international oils, fell $1.45, or 2.2 percent, to $64.34 a barrel in London.
Exxon Mobil tumbled $2.48, or 3.3 percent, to $73.70.
Hess lost $2.39, or 4.9 percent, to $46.09.
The yield on the 10-year Treasury note fell to 2.87 percent from 2.89 percent.
Gold fell $7.60 to $1,327.60 an ounce.
Silver slid 29 cents, or 1.7 percent, to $16.49 an ounce.
Meanwhile, Germany's DAX rose 1.1 percent and Britain's FTSE 100 gained 0.2 percent while the French CAC 40 added 0.3 percent.
The Japanese Nikkei 225 dropped 0.8 percent.
South Korea's Kospi fell 0.4 percent.
The Hang Seng of Hong Kong sank 1 percent.
The dollar dipped to 105.94 yen from 106.21 yen and the euro edged up to $1.2408 from $1.2405.