Gary Cohn: Trump's trade war with China is hurting the US economy more

Key Points
  • Gary Cohn tells the BBC the U.S. can't win a trade war with China.
  • The former top economic advisor to President Trump says tariffs are particularly painful to America's farming and auto sectors.
  • Cohn adds that the trade war is a convenient excuse for Beijing because China's economy was slowing anyway.
President Donald Trump praises departing economic adviser Gary Cohn (L) during a Cabinet meeting at the White House, Washington, March 8, 2018.
Kevin Lamarque | Reuters

President Donald Trump's former top economic advisor says the trade war with China is unwinnable and is hurting the U.S. economy.

Gary Cohn told the BBC in an interview that aired Thursday that tariffs were raising the cost of importing much needed products from China and were in fact neutralizing Washington's plan to stimulate growth through tax cuts.

"When you build plant equipment, you're buying steel, you're buying aluminium, you're buying imported products and then we put tariffs on those, so literally the tax incentive we gave you with one hand was taken away with the other hand," said Cohn.

Cohn, the former director of the U.S. National Economic Council, announced his resignation in April 2018 after Trump decided to impose import tariffs on steel and aluminium.

In the BBC interview, he described himself as openly anti-tariffs before adding that "everyone loses in a trade war."

The former Goldman Sachs president said Trump's plan to force Beijing's hand on trade imbalances via tariffs was a view that the president had held "forever" but were in fact offering Chinese bureaucrats a convenient excuse.

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"I think the Chinese economy was going to slow down with or without a trade war," Cohn said before adding it was having "a real impact" in parts of the U.S. economy such as automobile manufacturing and farming.

The White House didn't respond to CNBC's request for comment.

Federal Reserve and Trump

Trump has been placing public pressure on the Federal Reserve to cut rates at a steeper clip than the quarter-point reduction announced Wednesday.

Following the decision, the first cut to rates by the Fed since December 2008, Trump kept up the criticism, tweeting that Federal Reserve Chairman Jerome Powell "let us down."

Cohn said the central bank had been set up as an independent agency and once the chairman and governors were appointed, the president must relinquish any attempts to influence monetary policy.

"It's not supposed to be a political agency. And I very much believe in those separation of powers," said Cohn.

Cohn said he thought Powell is doing a "very good job" in a world of "extraordinarily low interest rates."

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