World on edge as tariff opposer exits

Top News | 8 Mar 2018

White House economic adviser Gary Cohn has become the latest casualty of Donald Trump's tumultuous administration, resigning in protest as the US president steps up his threats of steep tariffs on steel, aluminum and European cars.

Global markets fell - despite a detente in the Korean peninsula - amid fears Trump would embark on a more protectionist drive, with investors struggling to discern whether he would follow through on restrictive trade measures.

The Hang Seng index fell 1 percent to 30,196.92, while the China Enterprises Index lost 1.1 percent to 12,180.29.

Cohn led the charge on a tax cut proposal approved by Congress in December, but lost the internal struggle against more protectionist voices over trade tariffs.

The White House downplayed the idea Cohn resigned over more aggressive trade policies, but only moments before the announcement, Trump showed no signs of backing down even in the face of opposition from his own party.

Speaking to reporters, Trump said he was elected to protect American workers and industries that had been harmed by years of unfair trade policies.

"Our country has been taken advantage of by everybody. By everybody. And we cannot let that happen any longer," he said.

But Trump's plan to punish abusers by imposing 25 percent tariffs on steel and 10 percent on aluminum, against friend and foe alike, angered trading partners. It also startled US automakers and firms that rely on those metals and the free flow of trade.

It appears that former Goldman Sachs executive Cohn was drowned out by a decidedly more protectionist team including trade adviser Peter Navarro and Commerce Secretary Wilbur Ross.

Trump, in a tweet, said he would "soon" appoint a replacement. "Many people wanting the job - will choose wisely!" he wrote.

Insiders are whispering about conservative economist Larry Kudlow as a possible candidate to replace Cohn.

Cohn is the latest in a long string of senior advisors to resign or be fired, a virtually unprecedented turnover of administration staff. Hope Hicks, perhaps Trump's most trusted confidante, announced last week that she would resign as communications director.

The tariff plan also sent shivers through Republican leaders, whose party has traditionally embraced free trade.

House Speaker Paul Ryan was in the vanguard, calling on Trump to have a "smarter" plan that was "more surgical and more targeted."

But Trump once again dismissed the concerns about sparking a global confrontation, saying "trade wars aren't so bad the trade war hurts them. It doesn't hurt us."

Treasury Secretary Steven Mnuchin noted that he has been working on the specifics of the tariff plan. It will be announced this week "and I think we have a way of managing through this."

But the European Union already has threatened to retaliate against American blue jeans, bourbon and Harley-Davidson motorcycles.

Mexico's Economy Minister Ildefonso Guajardo has vowed to fight back against US tariffs and targeted "the things they export that are most politically sensitive."

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