Gary Cohn's exit from the White House is the loss of one of the most important pro-investor voices in the Trump administration and could be a negative for stocks and the dollar.
"It would seem to be not business friendly, not something good for investors. He was the voice against some of the trade protectionism," said Marc Chandler, head of currency strategy at Brown Brothers Harriman.
Stock futures sold off on the news of Cohn's departure, with the Dow losing an initial 300 points.
"I think going forward you lose another voice of moderation," said Chandler.
Cohn had been reportedly opposed to President Donald Trump's plan to tax imports of steel and aluminum from all countries. He was an architect of tax reform. Treasury Secretary Steven Mnuchin on Tuesday was more moderate on the idea of tariffs and said that Canada and Mexico could be exempt under a new NAFTA, which is still being negotiated.
Jack Ablin, CIO at Cresset Wealth Advisors, said he doubts Trump really wants to start a trade war and sees any damage to stocks by Cohn's departure as a buying opportunity.
"If the market gets scared, I would view it more as a near-term buying opportunity than a reason to sell. He's the chief economic advisor. That's significant. My guess is he was probably let go because of the rhetoric and [Trump] wants the rhetoric aligned," said Ablin. "Mnuchin is standing at attention. He says he's not against tariffs. Gary Cohn is against tariffs and trade wars."
Ablin said Trump's stand could be a negotiating ploy, but there has been an outcry from businesses, trading partners and members of Congress.
"I think he doesn't want to start a trade war just like he doesn't want to start a nuclear war ... this to me is the nuclear option of trade. For a president who uses the stock market as a barometer for success, I don't see it as a live threat," said Ablin. "I could be wrong. It's very difficult to get into the mind of the president. But this is a pattern ... that emerged."
Chandler said the Asian markets would set the initial tone for dollar reaction.
"There's a little debate over whether protectionism is good or bad for the dollar. On one hand, it's good for the dollar because it means we're importing less stuff. On the other hand, it means a trade war, which would slow global growth and there would be a spiral down for the dollar," Chandler said.