Gary Cohn, Chief Economic Advisor to President Donald Trump.
Former White House chief economic advisor Gary Cohn said Sunday that President Donald Trump‘s tariffs hurt the U.S. economy and undermined the stimulative impact of the administration’s massive tax cut passed in 2017.
Cohn, in an interview with CBS’ Face The Nation, said Trump’s steel and aluminum tariffs “collided” with his tax policy by undermining a provision that allowed companies to write off their capital expenditures.
“I think it’s totally hurt the United States,” Cohn said, referencing the tariffs. “[…]We’re missing a big component. We’re missing the capital expenditures from companies in the United States.”
Companies buy steel and aluminum to build factories and equipment, but the metal tariffs increased input costs and diminished the benefits of writing off these capital expenditures under the tax law, Cohn said.
“So all of the sudden, the advantages that we were trying to give companies to help stimulate the economy, to build facilities, to go out and hire people, to drive wages, we took away that advantage by taxing the input that they needed to build,” Cohn told CBS.
The former Goldman Sachs president played an instrumental role in formulating Trump’s tax policy, but he clashed with protectionists in the administration on the issue of tariffs. He also criticized the White House over Trump’s response to a white nationalist rally in Charlottesville, Virginia in which a civil rights activist was killed in 2017.
On backing Trump: ‘I’m leaving the door open’
On the economy, Cohn does not see a recession on the horizon and expects fourth quarter GDP to come in at 2.5%. He credited the tax cut with strengthening the U.S. consumer over the past two years.
“The U.S. economy is strong and continues to be very strong,” Cohn said. “The U.S. consumer is very strong. If you look at what’s happened in the last couple of years with tax reform, we have put more disposable income in the hands of the U.S. consumer, and the U.S. consumer is out spending it.”
Cohn also disagreed with the Trump administration’s repeated criticism of the Federal Reserve’s interest rate policy.
“I think our interest rate policy is in a good place,” Cohn said. “I think the consumer is in a good place, and I think the U.S. economy is in a good place. We actually have interest rates at a level right now where activity is growing.”
When asked who he would support in the 2020 presidential election, Cohn would not definitively endorse Trump. He said he supports Trump’s economic policy, but also votes on social issues.
“Now, I just don’t vote on the economy,” Cohn said. “I vote on a lot of the social issues as well. So, you know, in many respects, I’ve got to balance both sides of that equation before I figure out who I’m gonna vote for.”
“I’m leaving the door open,” Cohn continued. “But at this point, I don’t have any intention not to vote for the president.”