Cohn Quits After Split With Trump -- WSJ
Top economic adviser lost effort to stop planned tariffs; exit could rattle investors
By Nick Timiraos, Peter Nicholas and Liz Hoffman
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (March 7, 2018).
Gary Cohn will resign from the White House after 14 months serving as President Donald Trump's top economic adviser, he said Tuesday, days after Mr. Trump surprised his senior staff by announcing steel and aluminum tariffs that Mr. Cohn had opposed.
During his time at the White House, Mr. Cohn oversaw a major revamp of the U.S. tax code and pushed a significant rewrite of financial rules. But the former Goldman Sachs Group Inc. executive stumbled in an uphill and monthslong fight to sway Mr. Trump against the tariffs. He was also on the losing side of an effort to prevent the U.S. withdrawal last year from the Paris climate accord, and will leave having made little progress advancing a $1 trillion infrastructure program.
Financial markets have seesawed in recent weeks, first on the prospect that higher federal budget deficits approved by Mr. Trump might boost inflation and interest rates and more recently because of his desire to start a "trade war."
Mr. Cohn's departure could further rattle investors. Though not universally well liked on Wall Street, Mr. Cohn was widely admired for his market savvy and his pro-trade world view, which many traders and executives share. The dollar slumped, and futures in the Dow Jones Industrial Average were down about 300 points, or 1.2%, late Tuesday.
Mr. Cohn said it had been an honor to serve in the administration as director of the National Economic Council and thanked the president in a statement. Mr. Trump praised Mr. Cohn's "superb job" as his economics adviser and called him a "rare talent."
The White House staff has seen numerous departures over the past year. A study by the Brookings Institution in January showed turnover in Mr. Trump's White House surpassed that of the previous five presidents' first year in office.
Since the study was published, Communications Director Hope Hicks, Staff Secretary Rob Porter and communications adviser Josh Raffel have also resigned, among others.
Mr. Cohn was part of a globalist wing of the White House that lately has been in retreat. Peter Navarro, another adviser who helped craft the president's protectionist stance in the campaign, prevailed in a high-profile fight over new tariffs on aluminum and steel imports. Mr. Cohn had fought internally to stave off the move and told aides last week he might resign if the president followed through and imposed the tariffs.
"I don't think he suddenly lost an argument. He just never won it," said Joshua Bolten, who served as chief of staff to President George W. Bush from 2006 to 2009. "He's done a very effective job through rational argumentation and maybe through bureaucratic maneuvering in staving off the day of reckoning."
As recently as early this week, Mr. Cohn still seemed to be fighting the decision, trying to put together a meeting among industry executives whose companies could be hurt by the tariffs. That meeting, which had been expected to happen later this week, was no longer being planned following Mr. Cohn's resignation, a White House official said.
Another White House official said in an interview Tuesday that Mr. Cohn had always intended to stay for about a year. This person said that Mr. Cohn wasn't resigning because of frustration or disappointment over Mr. Trump's decision to impose steel and aluminum tariffs.
Mr. Cohn wound up staying two months longer than he had anticipated because the president asked him to help with the State of the Union speech and a trip to a global economic conference in Davos, Switzerland, the official said.
Mr. Cohn, though, was unhappy about the "process" by which Mr. Trump last week announced that he would be imposing steel and aluminum tariffs, the official said.
This person described the process as one in which White House proponents of the tariffs, on their own, slipped into the president's office "at 6 o'clock at night" last Wednesday, then called steel and aluminum CEOS two hours later and invited them to a meeting the next morning, telling them the president would sign an executive order imposing the taxes even though no such order was ready.
"There is extreme frustration when the process breaks down," the official said. In this instance, the official said, the White House "nationalists hijacked the process."
One Wall Street executive who kept in contact with Mr. Cohn said a rotating group of colleagues and friends took turns urging him to stay. Some of these people said Mr. Cohn's departure hinted at the limits of trying to hem in Mr. Trump's desire to take more dramatic actions on trade.
On Tuesday, Treasury Secretary Steven Mnuchin told lawmakers that the administration wasn't looking to get into a trade war. Later in the afternoon, Mr. Trump said, "trade wars aren't so bad."
The departure will put pressure on other advisers, especially Mr. Mnuchin, to make the case for preserving the post-World War II trade architecture the U.S. helped construct and for speaking credibly to financial markets.
"More than anyone else in the White House, Cohn had credibility with the markets," said Ian Katz, a financial policy analyst at Capital Alpha Partners in Washington. "If we go several days without news of a replacement, investors could get edgy."
The National Economic Council job post doesn't require Senate confirmation. An administration official said those being considered to succeed Mr. Cohn include Andy Puzder, a fast-food executive who withdrew his labor secretary nomination after domestic-abuse allegations from an ex-wife surfaced. Mr. Puzder has denied the claims.
The official said others who could be considered include CNBC commentator and former Trump campaign adviser Lawrence Kudlow; Council of Economic Advisers Chairman Kevin Hassett; and Mr. Navarro.
With Mr. Cohn's departure, several Goldman alumni who joined the administration last year will have left.
"Gary Cohn deserves credit for serving his country in a first class way, " Goldman Sachs CEO Lloyd Blankfein tweeted Tuesday afternoon. "I'm sure I join many others who are disappointed to see him leave." Mr. Cohn had spent 26 years at Goldman was once seen as the likely successor to Mr. Blankfein.
Mr. Cohn grew up in Cleveland, where his first job was selling window frames and aluminum siding. He later traded silver on Wall Street and took a pay cut to join Goldman's commodities arm. He became a partner in 1994.
He has stayed long enough in the White House to keep tax-deferred treatment on more than $250 million in Goldman stock.
Early on, Mr. Trump enjoyed introducing Mr. Cohn as a former Goldman executive who gave up a lucrative career to work for him. In a Wall Street Journal interview in July, Mr. Trump mused about installing Mr. Cohn as the next chairman of the Federal Reserve.
But that nomination never happened. Mr. Cohn criticized Mr. Trump's response to the racially charged violence in Charlottesville, Va., and found himself isolated.
Mr. Cohn found his way back into Mr. Trump's good graces last fall by shepherding the president's tax cut package through Congress, delivering the president his signature legislative accomplishment.
Mr. Cohn performed so favorably that the president discussed with friends as recently as last month whether to install him as chief of staff, even though Mr. Cohn is a registered Democrat.
--Rebecca Ballhaus contributed to this article.
Write to Nick Timiraos at email@example.com, Peter Nicholas at firstname.lastname@example.org and Liz Hoffman at email@example.com
(END) Dow Jones Newswires
March 07, 2018 02:47 ET (07:47 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.