“They can turn credit on and they can turn credit off,” Cohn said. “They needed to slow down an overheated economy where prices and real estate prices and everything were getting out of hand. I think President Trump provided that excuse for the Chinese.”
A former president of Goldman Sachs, Cohn spent much of his time as director of the National Economic Council pushing back against Trump on global trade and his influence gradually eroded. Cohn embraced economic internationalism, while Trump, who planned to impose tariffs on steel and aluminum imports at the time of Cohn’s departure, doubled down on economic nationalism.
Since leaving the White House, Cohn hasn’t been shy about criticizing Trump’s policies. In January, he called the partial government shutdown “completely wrong” and said he was “confused as to what the White House’s strategy is on this.”
Trump, meanwhile, has at times been contradictory in his approach to China. This week, he said a new trade deal with Beijing might not happen until after the 2020 election and that much hinged on whether he was reelected. Trump previously had pledged that a major crackdown against China was imminent. In May, Trump more than doubled tariffs on $200 billion in Chinese goods after accusing China of reneging on its commitments. The president also threatened to impose tariffs on an additional $300 billion or so in Chinese goods.
Business leaders have become increasingly concerned about the lack of progress between the two economic superpowers. In June, Trump and Chinese President Xi Jinping agreed to restart negotiations. But little momentum has followed.
Cohn told the BBC that the Chinese economy would have slowed with or without the trade war. But he agreed with Trump’s moves to address China’s theft of U.S. intellectual property and its attempts to block American companies from competing in Chinese markets.
“That has to be fixed,” he said.
Cohn emphasized that “everyone loses in a trade war.” Constant uncertainty about tariffs stops businesses from investing, he said, and tariffs drive up the cost of importing crucial products from China, negating the intended benefits of Trump’s tax cuts. And the U.S. isn’t creating manufacturing jobs, he added.
“When you build plant equipment, you’re buying steel, you’re buying aluminum, you’re buying imported products and then we put tariffs on those, so literally the tax incentive we gave you with one hand was taken away with the other hand,” Cohn said.