Trump's former economic advisor warns the trade war with China is taking a bigger toll on the US
- Gary Cohn, President Donald Trump's former economic advisor, told the BBC that key parts of the US economy are losing in the trade war with China.
- In an interview published on Thursday, Cohn said that the Chinese economy was going to slowdown regardless, but the trade war gave the Chinese government a "convenient excuse" to reign in credit-fueled growth.
- The US and China concluded two days of renewed trade negotiations on Thursday, and while both sides said the conversations were "constructive," no deal was reached.
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The US could be losing its own trade war.
Gary Cohn, the former chief economic advisor to President Donald Trump, told the BBC the trade war is hurting the US more than the Chinese economy, which was already poised to decelerate before the two countries started slapping each other with tariffs."The trade war with the United States was a very convenient excuse for the Chinese to slow down their economy," Cohn said. He added, "The Chinese economy was going to slowdown with or without a trade war."
China's second-quarter economic growth slowed to a 6.2% year-on-year rate, the lowest pace in 27 years. According to Cohn, the Chinese economy relies on credit availability, and the government controls the levers that allow credit to flow in and out of the economy.
In the US, the farming and automotive industries are taking the biggest hit as tariffs are making it more difficult to sell products abroad and to import materials for production, Cohn added. The service economy, which includes restaurants, has been insulated because the US grows a lot of its own food.
"You're seeing a very interesting bifurcation in the United States economy," he said.
The US and China concluded another round of trade negotiations in Shanghai on Thursday. Both sides said the talks were "constructive," but still, no deal has been reached.Right as the talks began, Trump accused China of failing to fulfill its past commitments to purchase more products from the struggling US agriculture industry. The White House said the Chinese reaffirmed their agreement to buy more agricultural exports from the US during the trade discussions.
Cohn, a supporter of free trade, left the White House in March 2018 after disagreeing with Trump's decision to institute steel and aluminum tariffs.