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Money News

Who is Gary Cohn and Why Does His Departure Matter?

March 07, 2018

  • Gary Cohn, the chief economic advisor to President Trump, will step down
  • Cohn, who favors free trade, was seen as a voice of reason and moderation
  • News of his departure coincided with a market drop
2 min read

Gary Cohn, the lead economic advisor to President Trump announced plans to leave the administration on Tuesday, citing disagreements over planned trade policies.

In reaction, the Dow Jones Industrial Average fell 300 points as markets opened on Wednesday morning, before recovering somewhat, according to reports.

Cohn was Trump’s top economic advisor, heading something called the National Economic Council (NEC).

The market has seesawed in recent weeks, and key indexes are down from record highs reached in January. In addition to Cohn’s departure, experts have cited concerns about inflation and rising interest rates, as well as the possibility of a trade war stoked by new tariffs on aluminum and steel.

So who is Gary Cohn?

Cohn was Trump’s top economic advisor, heading something called the National Economic Council (NEC).

The NEC helps to coordinate policy-making for domestic and international economic issues. It also helps to coordinate economic policy, advice, and goals for the president, and assists in  implementing the president’s economic policy agenda, according to its mission statement.

One objective of the NEC is to ensure the president hears competing points of view on economic policy.

Why did Gary Cohn quit?

Cohn, a Democrat, is a free-trade advocate, meaning he supports open international trade with limited restrictions on exports and imports, as well as trade agreements such as the North American Free Trade Agreement, and the Trans-Pacific Partnership.

These treaties favor negotiations around imports and exports, in contrast to trade wars.

Last week, the president announced he would levy tariffs on aluminum and steel imports of 10% and 25%, respectively.

The move provoked strong international condemnation from trading partners, as well as numerous members of Congress, such as House Speaker Paul Ryan (R-Wis.) It also prompted fears that trading partners would impose tariffs of their own on U.S. products, in retaliation.

Why does Cohn’s departure matter?

Cohn was viewed by many on Wall Street as a voice of reason, according to financial experts who have expressed concerns that his departure adds uncertainty to the Trump administration’s economic direction.

“Cohn has been a voice of moderation, he’s been a voice who understands markets, who understands investors, a voice that’s committed to US playing a leadership role in the global system. His departure leaves an enormous void in that sense,” Nathan Sheets, the chief economist at PGIM Fixed Income told CNBC on Tuesday.

On Wednesday, Treasury Secretary Steve Mnuchin said the administration would go ahead with its planned tariffs on steel and aluminum.

Gary Cohn’s background

Cohn, the grandchild of Polish immigrants and the son of a middle class family from Ohio, struggled with academics due to dyslexia, but ultimately landed a job at Goldman Sachs, according to reports.

He started out in the Goldman’s bonds and commodities divisions and moved on, over a 20-year career at the bank, to become its president and chief operating officer.

He left those positions in 2016 to work for the Trump administration.

Here’s what Goldman chairman and chief executive Lloyd Blankfein had to say about Cohn on Twitter on Tuesday:

By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

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