The White House's top economic adviser stepped down from his role in protest over the US president's plans to impose tariffs on steel and aluminium imports and amid news that the Office of the US Trade Representative was investigating China's practices with regards to intellectual property.
In a statement published by the White House, Gary Cohn only said it had been an honour to serve his country and to enact pro-growth policies for the benefit of Americans, including the recently approved tax cuts.
Nevertheless, according to two persons familiar with the events leading up to his resignation, Cohn had shown himself non-committal when asked to publicly support the Administration's proposal to levy a 25% tax on purchases of steel from overseas and of 10% on foreign aluminium, Bloomberg reported.
In reaction to the news, as of 0738 GMT futures on the Dow Jones Industrials were falling by 361.0 points to 24,491.0 and those for the S&P 500 by 30.0 points to 2,694.0.
Meanwhile, the yield on the benchmark 10-year US Treasury note was down by two basis points at 2.86%, alongside a 0.10% dip in the US dollar spot index to 89.53, while dollar/yen was 0.46% lower to 105.73.
“Not only does this mean that the tariffs are likely to be implemented, but Cohn, a former Goldman Sachs executive, was seen as a beacon of reason and conventional economic thinking in an erratic administration. His departure adds to the impression of chaos in the White House,” surmised Marshall Glitter at ACLS Global.
The day before, reports had indicated that Cohn was trying to rally industry leaders to lobby the president to dilute the tariffs, which had been proposed by Commerce Secretary Wilbur Ross, but a meeting between the two sides scheduled for Tuesday was cancelled.
National Security adviser HR McMaster reportedly sided with Cohn, in a move that some observers speculated might cost him 'points' with the current administration.
Separately, on Wednesday morning Bloomberg reported the White House was waiting for a report from the US Trade Representative on China's practices in the field of intellectual property, which might lead to a clamp down on investments from that country via what is known as a Section 301 action and perhaps also retaliatory tariffs on a range of products that it exports.
Under Section 301, the US would only allow Chinese takeovers in those sectors to which Beijing also gives American companies access.
An announcement from USTR on China's practices as related to intellectual property was expected next month.