Trump First-Term Economy Chiefs Refrain From Backing Tariff Plan

Two of President Donald Trump’s top economic chiefs from his first term refrained from backing his current approach of jacking up import duties on a range of trading partners to levels unseen in decades.

“The problem right now is we don’t have certainty” on tariffs, Steven Mnuchin, Trump’s Treasury secretary from 2017 to the start of 2021, said Wednesday at the Bloomberg Invest forum in New York. “My own view on the tariffs would be that, if he wants to do something, I like the idea of the 10% tariff across-the-board.”

Rather than such a universal levy, Trump has imposed a 20% surtax on Chinese goods, with 25% levies on Mexico and on most Canadian imports. He’s also pledged a welter of other actions to be taken in the coming weeks and months, with a focus on “reciprocal” treatment of foreign products compared with how US-made items are taxed.

Steven Mnuchin during the Bloomberg Invest event in New York, on March 5.

Photographer: Michael Nagle/Bloomberg

“What we have to try to figure out is, what is the objective of the tariffs?” Gary Cohn, Trump’s first National Economic Council director, said at the Bloomberg Invest forum Tuesday. “There may be a real, robust, bona fide reason to have tariffs. I just don’t know what we’re trying to achieve.”

As for tariffs to incentivize capital spending, “you could argue that’s not a bad long-term outcome,” for certain necessary products, Cohn said. “Toys and games — we can live without them” being made domestically, he suggested.

‘Really Regressive’

But a widespread tariff approach is “a really regressive way to raise revenue,” said Cohn, who now serves as vice chairman at IBM. He also questioned how effective it would be, given the impact of inflation and retaliatory measures by other countries.

Gary Cohn during the Bloomberg Invest event in New York, on March 4.

Photographer: Michael Nagle/Bloomberg

If the “things that are being tariffed are things that everyday people buy, it becomes a really regressive tax — I don’t think we want a regressive tax,” he said.

Trump’s current Commerce secretary, Howard Lutnick, said that the trade measures put on Mexico, Canada and China this month were all about reducing the influx of illegal fentanyl, in the aid of combating the drug crisis. Lutnick also said, in an interview with Bloomberg TV Wednesday, that next month’s trade actions will be about fairness and ensuring reciprocal treatment of American-made goods.

The administration’s approach is already spurring companies to boost output in the US, Lutnick said.

“You see the investments, there’s trillions of dollars of manufacturing moving to America, that means the cavalry is coming,” he said.

Mnuchin, who is founder of Liberty Strategic Capital, said the 10% tariff he advocates ought to be done through congressional legislation, which would then allow the proceeds to count toward offsetting Trump’s effort to extend his 2017 tax-cut package. Mnuchin said it would raise about $2.5 trillion over a decade.

--With assistance from Matthew Miller, Jonathan Ferro and Lisa Abramowicz.

To contact the reporter on this story:
Christopher Anstey in Boston at canstey@bloomberg.net

To contact the editors responsible for this story:
Margaret Collins at mcollins45@bloomberg.net

Robert Jameson

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