Donald Trump’s trade war with China and his tariffs on $200 billion of the superpower’s goods are intended to deliver a blow to the country and give the United States leverage for a new trade deal that will better serve Americans. But Newsweek reports that Trump’s former chief economic adviser Gary Cohn believes that the war is backfiring and harming the U.S. economy while failing to make a dent on China’s.
Cohn is a former top executive at the investment bank Goldman Sachs. He quit Trump’s economic advisory team back in 2018 after Trump’s tariffs on steel and aluminum imports, which Cohn warned could erase all of the gains from last year’s $1.5 trillion tax cut.
“I don’t really think it’s hitting the Chinese economy,” Cohn said in an interview with BBC News. “I think the Chinese economy is driven by credit and credit availability.”
“Credit and credit availability is determined by the central government,” he added. “The central government owns the credit availability mechanism and network in China, and they can turn credit on and they can turn credit off.”
Cohn claims that a U.S.-China trade war is an excuse for the latter to slow down their “overheated” economy where prices were beginning to get out of hand.
Trump's former chief economic adviser says president's tariffs backfiring on US economy https://t.co/TWe9F1OB4n
— Newsweek (@Newsweek) August 1, 2019
Trump’s trade war with China has seen many rough patches. As The Inquisitr previously reported, despite Trump’s near-ban placed on Huawei, the Chinese mobile phone manufacturer reported $32.2 billion in revenue for the second quarter of this year — a 23 percent increase over the last year. The surge comes as other major companies, such as Apple and other Chinese companies like Oppo and Xiaomi, experience a decline in revenue.
“Given the foundation we laid in the first half of the year, we continue to see growth even after we were added to the entity list,” Huawei chairman Hua Liang said in a statement.
“That’s not to say we don’t have difficulties ahead,” he added, suggested that these difficulties could affect the companies growth — at least on a short-term scale.
Trump claims that Huawei is a national security risk and placed it on an “entity list,” which means that any company in the U.S. that wishes to do business with them must apply for a federal license.
Given that Trump’s trade war with China is showing some cracks, Cohn isn’t the only one speaking out about the dangers it poses to the U.S. The Congressional Budget Office believes that Trump’s tariffs will cause a 0.1 percent decrease in the U.S.’s annual GDP growth rate each year until 2029. In addition, this calculation doesn’t include the latest tariff hike in May.