President Trump’s former top economic adviser warned Thursday that a developing trade war could wipe out the benefits of the GOP tax cuts.
Speaking at an event hosted by The Washington Post, Gary Cohen, who stepped down as the chair of the National Economic Council in April, said that an escalating series of retaliatory tariffs between countries could spark higher inflation and force American consumers to take on more debt, potentially pushing the economy into a slowdown and erasing whatever additional growth the tax cuts are creating.
Cohn reportedly resigned from the White House due to his opposition to Trump’s tariff policies. “I have always said the trade deficit doesn't matter. In many respects, it's helpful for our economy,” Cohn said Thursday. And the current saber-rattling by the Trump administration and various trading partners is already having a dampening effect on businesses in the U.S., Cohn said, as companies take higher materials costs into consideration in their investment forecasts.
On the tax bill itself, Cohn said that he wasn’t sure if the tax cuts would pay for themselves. “It won’t be revenue-neutral. It may be revenue positive. It may be revenue negative. We don’t know,” Cohn told the Post’s Damian Paletta. Cohn stuck to White House script on wage growth, saying that the new tax rules would encourage more capital expenditures by businesses, which would result, eventually, in higher wages for American workers: “I am pretty confident that we wrote a tax law that gives companies enormous incentive to build new factories, to hire new people, and to really invest in the U.S. economy.”