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Former Trump advisor Gary Cohn could care less about trade deficits.
“Look, I have always said a trade deficit doesn’t matter,” the ex-White House chief economic advisor said during a Washington Post interview Thursday. “In many respects, it’s helpful to our economy.”
Cohn’s comments illuminate in part why he left a White House insistent on shifting the trade balance with key economic partners. Cohn defended the Trump administration’s broader efforts to get allies to reduce their barriers to free trade, but he showed a clear intellectual divide with the president and some top administration advisors on deficits.
President Donald Trump has argued that trade deficits — where a country exports more goods and services to the U.S. than America exports in return — mean foreign countries are taking advantage of the U.S. He has described deficits with countries such as China as money “lost” to the trading partners.
“Last year, we lost $500 billion on trade with China,” Trump said in March. “We can’t let that happen.”
Most economists dispute Trump’s notion of a trade deficit. It is also unclear whether the imbalances have hurt the U.S. economy or job growth, as Trump contends.
In critical trade negotiations with China, Trump has insisted on Beijing importing more goods from the U.S. to reduce the deficit. Trump could decide whether to put tariffs on billions of dollars in Chinese imports this week as part of his push to change the trade balance with the world’s second-largest economy.
Cohn resigned from the White House in March. He opposed the president’s plan to impose tariffs on 25 percent and 10 percent on steel and aluminum imports, respectively. Cohn had suggested he planned to leave after Republicans passed their tax plan, which he helped to shepherd through Congress in December.
Trump’s recent decision not to exempt allies Canada, Mexico, and the European Union from those metals tariffs ratcheted up global trade tensions and sparked retaliation. Cohn said Thursday that he sees “a lot of friction” in the global trading system.