After Cohn, Mnuchin positions himself as the economic moderate

US Treasury Secretary Steven Mnuchin initially sided with Gary Cohn in opposing Trump's plans to impose punishing steel and aluminum tariffs - but he soon hewed to the president's position.
US Treasury Secretary Steven Mnuchin initially sided with Gary Cohn in opposing Trump's plans to impose punishing steel and aluminum tariffs - but he soon hewed to the president's position.PHOTO: EPA-EFE

WASHINGTON (AFP) - With President Donald Trump's top economic adviser Gary Cohn out the door, US Treasury Secretary Steven Mnuchin is working to assume the mantle of the White House's main economic voice of reason.

The former banker and Hollywood producer is intensely loyal to the president and, in his public remarks at least, has always strived to put a softer finish on Trump's confrontational "America First" economic agenda.

At first, Mnuchin sided with Cohn in opposing Trump's plans to impose punishing steel and aluminum tariffs.

But he soon hewed to the president's position, under pressure from the administration's trade hawks: Commerce Secretary Wilbur Ross and trade adviser Peter Navarro.

Cohn stepped down on Tuesday, having lost the bruising battle over the direction of Trump's trade policy.

As markets roiled in the wake of Trump's tariff announcements and European leaders spoke of retaliatory trade measures, Mnuchin toured television studios to deliver a message of appeasement.

"The president is not a protectionist," the Treasury secretary told CNBC on Friday.

"This is not a conventional president and because of that we're getting results we wouldn't have otherwise seen."

Mnuchin pointed, for example, to Trump's intensification of economic sanctions on North Korea, which the administration believes extracted Pyongyang's proposal for Trump and Supreme Leader Kim Jong Un to meet.

Earlier in the week, Mnuchin told Bloomberg TV the tariffs were "a natural evolution of what the president's economic policies are".

The Trump stalwart - who frequents the corridors of the White House, which abuts the main offices of the Treasury Department - said the administration was considering "exemptions."

Mnuchin's mollifying words notwithstanding, US trading partners appear no less concerned by the prospect a trade war, given that the hard-liners in the White House now have the upper hand.

Trade hawks ascendant

"The protectionists are clearly running the show right now," Brian Gardner, managing director at the investment banking firm Keefe, Bruyette & Woods, told The Washington Post.

"If they replaced (Cohn) with another economic nationalist, then it really gets dicey for the markets and investors."

Navarro, the anti-globalisation advocate with China is his crosshairs, is in line to be Trump's chief trade adviser, according to The Wall Street Journal.

Long in the shadow of Cohn - the former Goldman Sachs president whom Navarro had to copy on emails to Trump - the Harvard-trained economist is a tough-talking former professor who made his name with anti-Beijing diatribes.

But Navarro triumphed with Cohn's departure.

"I don't worry about getting outmanoeuvred," he told The Wall Street Journal.

"I just worry about getting things done." In any event, the pitched White House battle between the proponents of free trade and those who favour protectionist barriers seems to have delighted Trump, arousing his taste for conflict.

"I like having two people with different points of view," Trump told reporters Tuesday. "But I like watching it. I like seeing it. I think it's the best way to go. I like different points of view." The president even hinted Thursday that Cohn could return to the White House.

"I have a feeling you'll be back. I don't know if I can put him in the same position, though," Trump said, teasing old rumours that Cohn could replace White House Chief of Staff John Kelly.

"He's not quite as strong on those tariffs as we want but that's okay."