Washington: US President Donald Trump is “desperate” to reach a trade deal with China and is being ill-served by protectionist advisers who have left the White House “living in chaos” on major decisions, his former top economic adviser Gary Cohn has said.
In an interview to Freakonomics, a public radio show and podcast, the former President of Goldman Sachs said that the US President “needs a win” and expects a China deal to boost the stock market, which has treaded water for the past year.
Cohn, 58, served for 14 months as Trump’s Director of the National Economic Council. His comments came after the President said at the White House on Wednesday that he was “not in a hurry” to reach a deal with Beijing and said “there’s always a chance” the talks could fail.
The President, however, expressed an eagerness to host a signing summit at his Mar-a-Lago estate in Florida for Chinese President Xi Jinping, the Washington Post reported.
Trump had in February expressed optimism about the prospects for a trade agreement with China after he delayed a scheduled increase in tariffs on Chinese imports.
He said he was delaying an increase from 10 per cent to 25 per cent in the tariffs his administration levied earlier on $200 million in Chinese products. The hike was scheduled to take effect from March 1.
Cohn cast doubt on Trump’s ability to obtain fundamental changes in China’s state-led economic system, one of his core negotiating objectives.
“I think market access, the Chinese will give because they’ve been close to giving it for a while. But how are we going to stop the Chinese from stealing intellectual property?” he said.
“How are we going to stop them from copyright infringement? What is the enforcement mechanism and what are the punitive damages if they don’t stop?”
The US has proposed enforcing any agreement via 18 annual meetings with Chinese officials, backed by the threat of unilateral American tariffs, according to chief US trade negotiator Robert E. Lighthizer.
Senate Minority Leader Charles Schumer said that Trump should “have the guts to walk away” if the Chinese don’t offer significant concessions.
A self-described “globalist” in a nationalist White House, Cohn argued against the President’s enthusiasm for imposing tariffs on products such as solar panels and steel, according to the Post.
But he said he was bested by White House adviser Peter Navarro and Commerce Secretary Wilbur Ross, the administration’s leading protectionists.
Cohn resigned in March 2018, shortly after Trump announced 25 per cent tariffs on imported steel and aluminum.
He said he supported the President’s desire to crack down on unfair Chinese trade practices, but said tariffs “don’t work”. As evidence, he pointed to last year’s record $891 billion trade deficit in merchandise and the record $419 billion gap in trade with China, the Post said.
“So tariffs were used as the threat. Did it hurt the Chinese at all? We had record trade deficits,” Cohn said.