Donald Trump’s former chief economic advisor has warned that the US president’s ongoing trade war has backfired, and is actually harming the US economy more than China.
Speaking to the BBC, Gary Cohen said the tariff battle had had a “dramatic impact” on US manufacturing and capital investment while it provided “a very convenient excuse” for China to slow down its overheated economy.
The former Goldman Sachs chairman served as director of the National Economic Council in the Trump administration from January 2017 to April 2018. He repeatedly clashed with the president over his “America First” economic nationalism policy, finally resigning last year after Trump decided to impose import tariffs on steel and aluminium.
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Around the same time, the Trump administration slapped 25% tariffs on $250bn (£206bn) worth of Chinese imports, before China retaliated by targeting $110bn in hiked tariffs on US products later in 2018.
“Cohn is less than flattering about the US president's policies,” says BBC North America editor Jon Sopel. “He thinks the trade wars have created geopolitical uncertainty, which is stopping businesses from investing. Strikingly he also thinks that, for all the rhetoric, the trade war with China is hurting the US more than it is the Chinese”.
Instead of punishing China, tariffs have in fact damaged job creation in the American manufacturing sector while allowing the Chinese government “to control its economy as desired, despite tariffs, by changing the availability of credit”, says The Independent.
The US had threatened to tax another $300bn in Chinese imports earlier this year before moving towards more conciliatory rhetoric, but after declaring a temporary truce in June, US and Chinese trade negotiators have failed to find a breakthrough to end the 18-month impasse. And while both sides agreed that the latest discussions in Shanghai this week were “constructive”, “there’s still no indication that the trade war will come to an end any time soon,” says CNN Business.
Major issues still to be resolved include intellectual property rights, firm commitments on the purchase of US agriculture goods and the blacklisting of Chinese firms.
Within the context of a protracted trade war Cohen’s comments will not have been well received by Trump, but with a growing economy, record employment and interest rates falling, concerns about the impact of his protectionist trade policies will for now at least be minimal.
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