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An important voice for free trade proponents goes silent

WASHINGTON — Mr Gary Cohn is a Democrat, but his resignation as director of the White House National Economic Council actually underscored the fundamental divide between United States President Donald Trump and his fellow Republicans as the president seeks to raise barriers to foreign trade.

US President Donald Trump is joined at the podium by his chief economic adviser Gary Cohn in January. Mr Cohn's resignation from his post underscores the fundamental divide between Mr Trump and his fellow Republicans as the president seeks to raise barriers to foreign trade. Photo: The New York Times

US President Donald Trump is joined at the podium by his chief economic adviser Gary Cohn in January. Mr Cohn's resignation from his post underscores the fundamental divide between Mr Trump and his fellow Republicans as the president seeks to raise barriers to foreign trade. Photo: The New York Times

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WASHINGTON — Mr Gary Cohn is a Democrat, but his resignation as director of the White House National Economic Council actually underscored the fundamental divide between United States President Donald Trump and his fellow Republicans as the president seeks to raise barriers to foreign trade.

From his perch in the West Wing, Mr Cohn in effect served as a proxy for the business wing of the Republican Party as it fought what may be a losing battle against new tariffs on steel and aluminum imports.

His departure deprives free trade proponents of perhaps their strongest voice inside Mr Trump’s inner circle.

Trade has always been the Iron Curtain that divided Mr Trump and establishment Republicans, with the president arguing that other countries have run roughshod over the US when it came to the exchange of goods and services while most Republican leaders in Washington maintain that in fact lower barriers have helped keep the US as the world’s leading economic powerhouse.

Until Mr Trump’s signature tax-cut plan was passed in December, that schism was largely papered over in the name of unity as Republicans focused on lowering rates for corporations, wealthy Americans and middle-class families.

But the rift over trade has taken centre stage in the days since Mr Trump roiled markets and international relations by declaring he would impose tariffs of 25 perc ent on foreign steel and 10 per cent on foreign aluminum.

Mr Trump finds himself at odds with his party’s leaders in Congress, like Speaker Paul Ryan and Senator Orrin Hatch, the chairman of the powerful Senate Finance Committee, both of whom have long records supporting free trade.

Mr Hatch, who once delighted Mr Trump by saying that he was on the way to making his “the greatest presidency” in history, has broken sharply with the White House over tariffs.

In a sharply worded letter on Tuesday (March 6) to Mr Trump, Mr Hatch said that the proposed tariffs would be paid by American manufacturers and consumers, not foreign firms, and would undercut “the overwhelming and immediate success” of the tax cuts.

“Put simply, the proposed tariffs on steel and aluminum imports threaten to undermine that success,” he wrote.

Mr Trump even faced criticism of his proposed tariffs in person on Tuesday as he hosted Prime Minister Stefan Lofven of Sweden.

“Swedish prosperity is built on cooperation, competitiveness and free trade, and I am convinced that increased tariffs will hurt us all in the long run,” the prime minister told reporters as Mr Trump stood next to him at the White House.

Mr Cohn, a former Goldman Sachs banker, had become the most prominent target of trade skeptics on the right like Mr Stephen Bannon, the president’s former chief strategist.

Breitbart News, once headed by Mr Bannon, regularly included an illustration of a globe next to Mr Cohn’s name to mock him as a globalist.

“Policy differences are inevitable in any administration. That’s why White House process is so important,” said Mr Douglas Holtz-Eakin, the president of the American Action Forum and a Republican economics adviser.

“The process on the tariff issue appears to have been both chaotic and stacked against Cohn’s view.”

Skeptics of free trade wasted no time mourning Mr Cohn’s departure.

“While it seems that the tariff issue is reopening a fundamental schism between Trump and old-line Republicans, the average guy voter Trump seems to aim at and do rather well with seems as happy as a clam with the tariffs,” said Mr Clyde Prestowitz, the author of “The Betrayal of American Prosperity.”

“I guess my question is: Does Trump have a problem, or do the old-line Republicans who seem to be retiring at a rapid rate have a problem?” he added.

While Mr Trump’s views on many issues have been flexible or evolved over the years, his conviction that the US was being shafted has been a core principle going back decades, long before he first ran for president.

It is an article of faith that has informed his view of trade pacts, tariffs and manufacturing and that helped him tap into populist discontent during the presidential campaign in 2016, particularly in traditionally Democratic states in the Midwest like Wisconsin, Michigan, Ohio and Pennsylvania.

“I was elected, at least partially on this issue,” Mr Trump said Tuesday. “And I’ve been saying it for 25 years: Our country’s been taken advantage of by everybody, by everybody — almost everybody. And we cannot let that happen any longer — not for our companies and not, most importantly, for our workers. So we’re not going to let it happen.”

The disagreement on trade has hovered in the background through much of Mr Trump’s tenure, but a showdown with Republicans had largely been put off since the president had talked about the issue more than he had taken action.

He pulled out of the Trans-Pacific Partnership, a 12-nation trade deal negotiated by President Barack Obama, but the agreement had never been ratified by Congress and seemed unlikely to be.

Mr Trump has threatened to scrap the Nafta with Mexico and Canada, but backed off in favour of negotiations that so far have not yielded consensus. He has likewise suggested he would withdraw from a trade deal with South Korea but so far has not followed through.

In one of the most tangible actions he has taken, Mr Trump slapped steep tariffs on foreign washing machines and solar energy panels in January, generating protests from domestic manufacturers and protests from other business leaders.

But he followed up days later with a friendly speech to investors and corporate chieftains gathered in Davos, Switzerland, the ground zero for globalisation and free trade, a speech written largely by Mr Cohn.

In the end, though, Mr Cohn could not head off the steel and aluminum tariffs, suggesting that the nationalist side of the White House had finally prevailed over his resistance.

Ms Lori Wallach, director of Public Citizen’s Global Trade Watch and a longtime opponent of trade deals, said the divide over trade crosses all sorts of traditional lines.

“The division is not Trump vs GOP,” she said, “but anyone contesting the trade and globalisation status quo from the left or the right versus a shrinking but still powerful bipartisan elite defense of policies that have outsourced millions of middle class jobs and pushed down Americans wages.”

But Mr Jason Furman, who was the chairman of the President’s Council of Economic Advisers under Mr Obama, said people on both sides of the issue were investing too much importance in it.

“The Republican Party, like the Democratic Party, is torn on trade,” he said, “but all sides of the debate share a common misconception that trade is more important than it actually is for growth, inequality or jobs.” THE NEW YORK TIMES

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