Cohn Exit Leaves Hard-Liners Ascendant in Trump White House

(Bloomberg) -- Gary Cohn’s departure from the White House is a victory for the protectionists and immigration hawks who have sought to push President Donald Trump to fully embrace their views.

The former Goldman Sachs Group Inc. president said Tuesday he would resign after what had become a bitter and personal dispute within the White House over Trump’s plan to slap steep tariffs on imported steel and aluminum. His departure is a victory for figures who have sought to expunge the Trump administration of advocates for free trade and globalization, principles that have long been a hallmark of the Washington establishment.

A registered Democrat, Cohn was regarded as one of the few political moderates close to the president. His absence will amplify voices like Commerce Secretary Wilbur Ross and trade adviser Peter Navarro who back the president’s impulses to buck convention and pick trade fights on a global stage.

Cohn also served as a counterbalance to figures like senior adviser Stephen Miller and chief of staff John Kelly, who have pushed Trump to the right on immigration -- and worked to keep him there -- and have encouraged the president’s forays into the culture wars.

The impact of Cohn’s departure was only magnified by the exceptional month of West Wing turnover and turmoil that preceded it.

Porter, Hicks

Rob Porter, the establishment Republican staff secretary who controlled the flow of paper to the Resolute Desk, left after his two ex-wives publicly accused him of abuse. Hope Hicks, the longtime Trump whisperer, resigned as communications director. National security adviser H.R. McMaster has held discussions about returning to the Pentagon. And son-in-law and senior adviser Jared Kushner has seen his influence curtailed because of his inability to gain a permanent security clearance and the departure of top aides earlier this year.

Investors, spooked by Cohn’s exit, were seen bracing for the impact Wednesday as U.S. equity futures slumped, while most government bonds climbed. The prospect of escalating protectionism earlier depressed stock markets in Asia, and the Stoxx Europe 600 Index headed for the first drop in three days, led by mining and auto shares.

House Ways and Means Chairman Kevin Brady said during an interview on Fox News on Wednesday that Trump will have a long list of potential replacements. Brady named Mick Mulvaney, director of the White House Office of Management and Budget, and Larry Kudlow, economist and CNBC contributor, as possible solid choices. Navarro, the White House Trade Council Director, said in a Wednesday interview with Bloomberg TV that he’s not on Trump’s shortlist of candidates.

Officials familiar with Cohn’s departure said his resignation was the culmination of his aggressive campaign to persuade Trump to abandon his proposed steel and aluminum tariffs, even after the president made his snap announcement last Thursday.

Canceled Meeting

Joined by McMaster, Cohn had argued repeatedly and passionately to Trump that the tariffs on imported metals would damage the relationship between the U.S. and its closest allies while threatening to erase some of the benefits of $1.5 trillion tax cut legislation the president signed into law late last year.

Cohn had organized a meeting at the White House later this week where he planned for the president to hear directly from executives of industries that consume the metals, such as automakers. The meeting was canceled after Cohn announced his resignation. The meeting will go forward, but with Vice President Mike Pence instead of Trump, according to a person familiar with the executives’ communications.

The gulf between the president and Cohn was made plain in a dramatic trade policy meeting on Tuesday in the Oval Office.

As aides discussed the logistics of making the president’s proposed 25 percent tariff on steel and 10 percent tariff on aluminum official, Trump sought confirmation from his advisers that he had their support.

According to two people with knowledge of the exchange, Trump specifically asked Cohn: We’re all on the same team, right? He then asked if Cohn supported the decision.

Cohn didn’t answer, the people said. A senior White House official disputed that Trump asked directly for Cohn’s support and didn’t recall Trump’s remark about being on the same team.

Cohn agreed with Trump that the U.S. should take a tougher stance toward China, but believed metals tariffs that also hit Canada, Mexico and the European Union are counterproductive, the official said.

The senior official said that Cohn had told the president in February that he felt underused and that he should have a larger role in the White House -- and if that wasn’t possible, he would consider leaving. Cohn plans to stay until the end of the month to help Trump choose a new economic adviser, and would consider returning to the administration for a larger role such as a Cabinet post, the official said.

On Tuesday evening, Trump wrote on Twitter that he would soon make a decision on a replacement. "Many people wanting the job -- choose wisely," he said.

Trump’s Frustrations

The episode is the latest indication that the president is frustrated by those in his administration whom he perceives as attempting to forestall or delay his aspirations.

Less than a week ago, Trump lashed out at Attorney General Jeff Sessions for asking the Justice Department inspector general to investigate claims of surveillance abuse that Trump regards as validation that the investigation into possible collusion between his campaign and Russia is politically motivated. Trump called the move “DISGRACEFUL!” on Twitter and questioned why Sessions hadn’t referred the case to criminal investigators.

The previous month, the president reacted sharply when Kelly said he had “changed his attitude” on whether Mexico would directly pay for a wall spanning the entirety of the southern U.S. border. A tentative deal with congressional Democrats to protect those who immigrated to the U.S. illegally as children -- called “Dreamers” by their advocates --collapsed after the president tacked on a string of conservative demands, at the urging of Kelly and Miller.

And Trump has been similarly frustrated when foreign policy aides have pushed him to embrace the NATO principle of collective defense, preserve the Iran nuclear deal, or tread lightly on decisions such as his announcement to move the U.S. embassy in Israel from Tel Aviv to Jerusalem.

Energy Secretary Rick Perry said Cohn was also probably tired after spending a year as one of Trump’s senior advisers.

“Anyone who’s worked at the White House for a year is probably getting a little burned out,” Perry told reporters in Houston. “And not just this administration, but every administration. It’s hard work.”

Nafta Talks

Trump began Wednesday with a call to reverse a trend he said has cost the U.S. more than 55,000 factories, 6 million manufacturing jobs and trade deficits totaling more than $12 trillion since President George H.W. Bush was in office. "Last year we had a Trade Deficit of almost 800 Billion Dollars. Bad Policies & Leadership. Must WIN again!" he said on Twitter.

It won’t take long to see the impact of the rising nationalist tide within the West Wing. The U.S. is hoping to complete renegotiation of the North American Free Trade Agreement before Mexico’s elections in July, and with major issues still outstanding, the president may be more inclined to walk away from the trilateral trade pact.

“Our time is running very short,” U.S. Trade Representative Robert Lighthizer said Monday.

Other crucial policy challenges loom on the horizon.

The deadline for a congressional deal to secure the fate of the young undocumented immigrants known as Dreamers passed Monday, meaning only ongoing legal proceedings stand to prevent their potential deportation.

At the same time, South Korea on Tuesday announced that North Korea had signaled a willingness to enter into high-stakes negotiations over its nuclear weapons program.

Lawmakers in both parties are also watching for Trump to retreat from his stated desire for Congress to pass substantial new gun-control legislation. Administration officials are already signaling Trump may adopt a less aggressive approach after intervention by the National Rifle Association.

The wave of departures in the West Wing is also likely to weigh heavily on a White House staff that has seen more than its fair share of tumult.

Shortly before Cohn’s departure was announced, Trump said in a news conference that he enjoys conflict in his administration, that work there could be “tough,” and that more departures could come.

“There will be people that change -- they always change,” Trump said. “Sometimes they want to go out and do something else.”

--With assistance from Joe Deaux Terrence Dopp and Tina Davis

To contact the reporters on this story: Justin Sink in Washington at jsink1@bloomberg.net, Jennifer Jacobs in Washington at jjacobs68@bloomberg.net, Margaret Talev in Washington at mtalev@bloomberg.net.

To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Mike Dorning

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