President Trump, by his own admission, likes conflict, especially when he’s evaluating the merits of differing policy options.
Wall Street, not so much.
At least, not the kind of conflict that breeds uncertainty over the direction of America’s economy, as the three major U.S. stock indexes demonstrated again Wednesday in the wake of economic adviser Gary Cohn’s decision to leave the Trump administration. All three slid at the start of regular New York trading, and both the blue-chip Dow Jones Industrial Average and the S&P 500 remained in the red at the close, even after paring some losses.
The former president of New York investment bank Goldman Sachs, Cohn was once viewed as a successor to CEO Lloyd Blankfein and widely seen as a moderating influence on Trump’s more protectionist trade impulses, including his decision to impose tariffs of 25 percent on steel imports and 10 percent on aluminum.
“Cohn was likely key in preventing anti-globalization sentiment from overwhelming the economic agenda,” Ryan Sweet, director of real-time economics at Moody’s, told the Washington Examiner. “With his departure, it adds uncertainty. The only certainty is that financial markets don’t like policy uncertainty.”
The 57-year-old is among the longest-serving members of the Trump administration, and Wall Street had applauded his appointment as director of the National Economic Council in January 2017. While Cohn made no mention of the tariffs in a statement released by the White House, he reportedly opposed them, as have a wide swath of corporate executives, Republican lawmakers and U.S. allies overseas who fear they may lead to a broader trade war and undermine the economic growth already beginning after an overhaul of the country’s tax code in December.
“Raising taxes on steel and aluminum importers will increase production costs for American manufacturers and raise prices on American consumers that rely on steel and aluminum products,” Sen. Orrin Hatch, a Utah Republican who chairs the powerful Senate Finance Committee, wrote in a letter to the president. “History has demonstrated repeatedly that consumers – American families and taxpayers – ultimately bear the burden of tariffs on these kinds of imports.”
Trump has remained steadfast in his support of the duties, however. The president posted on Twitter that in some circumstances, trade wars can be “good, and easy to win,” and shrugged off possible retaliation from the European Union with a threat to place on a tariff on its automobile imports.
If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!
— Donald J. Trump (@realDonaldTrump) March 3, 2018
As for Cohn’s departure adding to West Wing turnover that, according to the Brookings Institution, was already higher in Trump’s first year than that of any of the previous five presidents — and speculation that the executive branch is struggling to fill positions — the president was equally dismissive.
“Believe me, everybody wants to work in the White House,” Trump said at a joint news conference with the Swedish prime minister this week, while conceding that the environment can be challenging.
“I like conflict,” he said. “I like having two people with different points of view, and I certainly have that. And then I make a decision. But I like watching it, I like seeing it, and I think it’s the best way to go.”
In Cohn’s case, the conflicts reportedly covered topics including the metals tariffs, which pitted him against supporters including White House adviser Peter Navarro and Commerce Secretary Wilbur Ross.
Despite the White House’s energy, personnel changes are inevitable, Trump added, declining to name anyone who might be leaving in remarks just hours before Cohn’s departure. He followed up with a promise on Twitter later in the day to replace Cohn quickly.
Will be making a decision soon on the appointment of new Chief Economic Advisor. Many people wanting the job – will choose wisely!
— Donald J. Trump (@realDonaldTrump) March 7, 2018
In the meantime, Wall Street remains on edge. U.S. markets, which initially slid when Trump announced the metals tariffs, had begun to rally amid signals that Congressional Republicans would try to curb their impact but Cohn’s departure shook their confidence.
His decision follows a rocky week that included announcements that communications director Hope Hicks and a deputy, Josh Raffel, were leaving and speculation that national security adviser H.R. McMaster might step down as well.
“It seems as if, at some level, the administration is caught in a downward spiral, and Cohn was seen as a moderating influence, and perhaps even a calming influence, when it comes to disruptive policy affecting markets in a negative way,” Bankrate.com senior economic analyst Mark Hamrick told the Washington Examiner. “Markets hate uncertainty.”
