Gary Cohn warns trade war could wipe out gains from tax cuts

Gary Cohn contradicts Trump on importance of trade deficits

Gary Cohn contradicts Trump on importance of trade deficits

Gary Cohn, President Donald Trump's former top economic adviser, said trade disputes could wipe out the economic benefits of the tax cuts Congress passed past year and may even cause growth to slow.

Asked if the trade battle could erase the gains to the United States economy from the tax law passed last fall, Cohn said: "Yes, it could".

Companies are reluctant to invest in their businesses until they have a better idea of how negotiations with Canada, China, Mexico, the European Union and other US trade partners pan out, said Gary Cohn, who was director of the National Economic Council before leaving that post earlier this year, on Thursday at an event sponsored by the Washington Post.

"If you end up with a tariff battle, you will end up with price inflation, and you could end up with consumer debt", Cohn, a former Goldman Sachs executive, said at a Washington Post event. "You never know what leads you in it until we're in it", Cohn said of recessions.

Cohn left the White House in March amid disagreements with Trump on trade, as the president planned to adopt protectionist policies.

"I have always said the trade deficit doesn't matter", Cohn said.

The administration has since imposed steel and aluminum tariffs on some of America's top trading partners - including allies Canada, Mexico and the European Union - because of the trade deficit.

Cohn also said there is no evidence of increased corporate spending that proponents of the tax cuts predicted, but added he is still hopeful companies would boost hiring and investment later this year.

Cohn also touted the GOP tax law, arguing that it would take time for the cuts to spur higher wages for American workers.

Democrats have assailed the tax law for being beneficial to the wealthy while leaving the middle class in the lurch.

"It's just inappropriate and uncalled for and that's not his job", Cohn said.

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