Gary Cohn’s exit from the White House is setting off alarm bells on Wall Street.
The Dow opened down more than 300 points on Wednesday. The White House announced after the markets closed Tuesday that Cohn, President Trump’s top economic adviser, was resigning. He disagreed with Trump’s planned tariffs on foreign steel and aluminum.
“His departure has caught investors off guard,” said Alec Young, FTSE Russell’s managing director of global markets research.
Investors interpreted the resignation as a sign that Trump will follow through on his vow to impose a tariff of 25% on imported steel and 10% on aluminum. Wall Street fears the tariffs will be the opening salvo in a trade war that could damage the economy.
“It signals that the Trump administration is absolutely going to move forward with tariffs and the risk of a trade war is now more elevated,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
Cohn, a former Goldman Sachs president, helped design Trump’s tax cuts and was one of the administration’s leading proponents of free trade. He served as a calming influence on the market.
“Financial markets should recognize the future ramifications of Cohn’s departure,” said Mike O’Rourke, chief market strategist at JonesTrading. “Had Cohn stayed, he would have been viewed as the counterbalance to temper future protectionist measures.”
Trump’s tariff announcement last week shook Wall Street and led to backlash from top US trading partners, including Canada and the European Union.
The markets recovered on Monday and Tuesday, as investors gained confidence that House Speaker Paul Ryan and other top Republicans would soften Trump’s position on tariffs. Cohn’s resignation leaves one less voice in the White House to push back.
—CNN’s Matt Egan contributed to this report.
