Gary Cohn contradicts Trump on importance of trade deficits

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Gary Cohn, President Trump's former top economic adviser, on Thursday contradicted his former boss on the importance of trade deficits - saying a trade war could wipe out the benefits of GOP tax reform, according to a report.

Asked if trade fights could erase gains from last year's cut in corporate and individuals taxes, Cohn replied, "Yes, it could".

Companies are reluctant to invest in their businesses until they have a better idea of how negotiations with Canada, China, Mexico, the European Union and other USA trade partners pan out, said Gary Cohn, who was director of the National Economic Council before leaving that post earlier this year, on Thursday at an event sponsored by the Washington Post.

Cohn added that an escalating conflict over trade could even provoke a recession in the U.S. Tariffs feed inflation and raise consumer debt, which historically have been ingredients for an economic slowdown, he said. "You never know what leads you in it until we're in it", Cohn said of recessions.

Cohn announced his resignation from the White House in March amid disagreements with Trump on trade, as the president planned to pivot toward protectionist trade policy.

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"I thought that was kind of a flattering name", Cohn chuckled.

The administration has since imposed steel and aluminum tariffs on some of America's top trading partners - including allies Canada, Mexico and the European Union - because of the trade deficit. "In many respects, it's helpful for our economy".

"The part of tax reform to me that was so important was really the corporate side", he said.

Democrats have assailed the tax law for being beneficial to the wealthy while leaving the middle class in the lurch.

"It may be revenue positive, it may be revenue negative", Cohn said.