WASHINGTON—Gary Cohn, the top economic adviser to U.S. President Donald Trump and a key ally for Canada in a White House skeptical of free trade, announced his resignation Tuesday after Trump refused to relent on his plan to impose broad tariffs on steel and aluminum.

Cohn, a former president of the investment bank Goldman Sachs, is a pro-trade Democrat who was seen by Wall Street as an important counterweight to the administration’s “nationalist” faction.

His trade views sat uneasily with those of Trump, who has long favoured protectionism, and it was never clear how much influence he managed to exert on trade policy. Cohn had tried furiously, to no avail, to persuade Trump not to announce the tariffs.

But his departure as director of the National Economic Council may be another sign of the ascendance of the White House’s protectionist faction. It comes just over a week after Trump promoted trade skeptic Peter Navarro, who had previously been sidelined by chief of staff John Kelly.

Cohn’s resignation was announced less than two hours after Trump declared at a news conference that “trade wars aren’t so bad.” Trump had also cancelled a meeting Cohn had been trying to arrange with business executives opposed to the tariffs.





Trump explained at the news conference that he likes to make decisions by watching people with opposing views argue. Cohn’s exit means the loss of perhaps the strongest trade-friendly combatant in the room.

The U.S. dollar, Canadian dollar and U.S. stock futures all dropped in the immediate aftermath of the announcement.

“Not having someone there who understands business and financial markes, and is broadly speaking pro-trade, is generally unhelpful to those who want to take a less-than-zero-sum, constructive approach to trade policy,” said Eric Miller, president of the Rideau Potomac Strategy Group, a U.S.-Canada consultancy. “So we are losing an ally on the constructive side within the White House, and the more nationalist wing is certainly bolstered by his departure.”

It is not certain, though, whether Cohn’s absence will affect the fate of the North American Free Trade Agreement. The negotiations are being led by Trump’s U.S. trade representative, Robert Lighthizer, who has taken the hard-line approach favoured by the president.

“While (Cohn’s) departure may mean one less voice advocating for (the Trans-Pacific Partnership) and other multilateral approaches, NAFTA was, is, and always will be Lighthizer’s baby,” said Dan Ujczo, a Canada-U.S. trade lawyer at Dickinson Wright.

Trump did not immediately announce a replacement.

Cohn’s departure adds still more personnel turmoil into a presidency that has experienced early staff turnover far higher than those of other recent presidents. Hope Hicks, Trump’s communications director, announced her resignation last week.

Cohn had seriously contemplated resigning in the summer after Trump praised people participating in a white supremacist rally in Charlottesville, Va. But he decided to stay. He then helped Trump pass his biggest legislative accomplishment, a package of tax cuts and reforms to the tax code.

His standing appeared to have waned in subsequent months as Trump turned his focus to trade.

“It has been an honour to serve my country and enact pro-growth economic policies to benefit the American people, in particular the passage of historic tax reform. I am grateful to the president for giving me this opportunity and wish him and the administration great success in the future,” Cohn said in a statement.

Trump said Tuesday that he was not budging from the tariffs, and he demonstrated that he wants to use them for leverage on other trade matters.

He spoke soon after the website Politico obtained the European Union’s proposed list of proposed retaliatory tariffs on American goods. It includes dozens of items, among them steel products, bourbon, rice, peanut butter, pleasure boats, motorcycles and makeup.

Both House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell expressed concern about the proposed U.S. tariffs. Ryan asked Trump to take a “more surgical approach.” McConnell said “there is a lot of concern among Republican senators that this could metastasize into a larger trade war.”

Trump dismissed such fears, saying, “The trade war hurts them. It doesn’t hurt us.” And he repeated what he said in a Monday tweet: Canada and Mexico would be exempted from tariffs only if NAFTA is renegotiated.

“If we’re able to make a deal with Canada and Mexico in NAFTA, then there will be no reason to do the tariffs with Canada and Mexico,” he said.

Trump said he would “straighten out” the U.S. trade situation, even if it meant a trade war, “in a very loving way.”

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“It’ll be a loving, loving way. They’ll love us better. And they’ll respect us much more,” he said.

Read more:

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