Former White House chief economic adviser Gary Cohn said the U.S. is losing the trade war with China because the administration’s tariffs aren’t working.
In an interview with Freakonomics Radio, Mr. Cohn blamed Peter Navarro, director of the White House National Trade Council, and Commerce Secretary Wilbur Ross for getting the country into a harmful trade war.
“Tariffs don’t work,” said Mr. Cohn, who resigned from his post last year. “If anything, they hurt the economy because if you’re a typical American worker, you have a finite amount of income to spend. If you have to spend more on the necessity products that you need to live, you have less to spend on the services that you want to buy.”
He said Mr. Navarro is the “only one in the world” who believes that tariffs work.
The U.S. trade deficit rose more than 12 percent in 2018 to $621 billion, even as President Trump imposed a series of tariffs on imported steel and aluminum, and on a broad range of Chinese products.
The trade deficit with China last year was $419.2 billion, an increase of 11.6 percent from 2017.
“Did it hurt the Chinese at all? We had record trade deficits,” Mr. Cohn said. “The president needs a win. The only big open issue right now that he could claim as a big win that he’d hope would have a big impact on the stock market would be a Chinese resolution. Getting the trade deficit down I will never say is easy, but of the issues on the table, that’s relatively easier.”
The U.S. and China are negotiating a trade deal, and have postponed a new round of tariff hikes during the talks. But a hoped-for meeting between Mr. Trump and Chinese President Xi Jinping has been pushed back until April at the earliest.
“The China talks are moving along,” Mr. Trump told reporters Thursday. “As to whether or not we’ll strike a final deal, that I would never want to say.”
Treasury Secretary Steven T. Mnuchin told lawmakers Thursday that China “has gained many advantages through unfair trade practices.”
“This administration is committed to rebalancing our trading relationship in order to level the playing field for hardworking Americans,” Mr. Mnuchin said in prepared remarks to the House Ways and Means Committee. “We are negotiating with China on structural reforms to open their economy to our companies and protect America’s critical technology and intellectual property.”
He said Mr. Trump’s “economic program of tax cuts, regulatory relief, and improved trade deals is working for the American people.”
“During 2018, real GDP increased by 3.1 percent measured from the fourth quarter of 2017 to the fourth quarter of 2018,” Mr. Mnuchin said. “This is the highest Q4 to Q4 growth rate since 2005.”
Mr. Trump tweeted Thursday that his administration also is looking forward to negotiating “a large scale Trade Deal with the United Kingdom. The potential is unlimited!”
The British parliament rejected another Brexit proposal from Prime Minister Theresa May this week, leaving Britain’s status with the European Union uncertain.