Markets tumble, trade war fears rise as top White House adviser Gary Cohn resigns

UPDATE — 3/15, 9:55 a.m. EDT: President Trump has selected long-time CNBC contributor and former Reagan White House aide Larry Kudlow to replace Gary Cohn as director of the National Economic Council. 

Kudlow, well-known in Washington and Wall Street circles for his “supply-side” economic views, opposes Trump’s tariffs, but has acknowledged in recent days that U.S. policy on China must be reformed due to Beijing’s unfair trade practices.

The White House confirmed Tuesday Gary Cohn will resign from his position in the Trump administration, just days after the president announced his intention to impose stiff tariffs on foreign steel and aluminum, which Cohn was known to oppose over fear of stoking a trade war.

A member of the administration’s “globalist”, pro-trade faction, Cohn’s resignation leaves protectionist advocates National Trade Council Director Peter Navarro and Commerce Secretary Wilbur Ross holding an outsized influence over the president.

“(Cohn’s resignation) signals that the Trump administration is absolutely going to move forward with tariffs and the risk of a trade war is now more elevated,” said an investment adviser company executive.

As director of the National Economic Council, Cohn was instrumental in overhauling the U.S. tax code and a stiff opponent of Wall Street regulation.  Cohn also oversaw the administration’s massive rework of financial rules.

Following his statement addressing Cohn’s resignation, President Trump tweeted Cohn’s replacement would be named shortly.

Axios reported Wednesday morning possible replacements include Navarro, CNBC’s Larry Kudlow, former Federal Reserve governor Kevin Warsh and White House tax policy adviser Shahira Knight.

Cohn’s departure brings the total number of White House staff, Cabinet members or executive branch members leaving or dismissed from the administration to 22.

While no date has been announced for Cohn’s resignation to take effect, U.S. equity markets tumbled in the wake of the news, with the Dow Jones Industrial Average falling over 300 points before rebounding slightly after New York Stock Exchange trading began at 9:30 a.m. EST.

 

[Roll Call] [CNNMoney] [Reuters] [Photo courtesy Hot Air]