WASHINGTON (Reuters) - Economic nationalists appeared to gain the upper hand in a White House battle over trade with the resignation of Donald Trump’s top economic adviser, Gary Cohn, on Tuesday in a move that could ramp up protectionist measures that risk igniting a global trade war. Cohn did not spell out the reasons for his resignation. He had told Trump that markets would slump on a tariffs threat and was regarded as a bulwark of economic orthodoxy in an administration whose protectionist policies have sparked alarm among U.S. legislators and in governments around the world. Cohn’s resignation came after Trump said he was sticking with plans to impose hefty tariffs on steel and aluminum imports. While the measures on their own are relatively small, the risk is that an emboldened Trump administration will push ahead with a full-scale economic confrontation with China. America’s trade deficit with China hit $375.2 billion in 2017, equivalent to two-thirds of the country’s total trade deficit of $566 billion. Trump has said he will remedy what he terms the jobs- and industry-destroying deficits. “The economic nationalists now certainly have the upper hand and their camp is bigger. I think they are going to be very influential in the administration,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, a Washington-based think tank. The Trump administration has launched an investigation into intellectual property abuses by China, which could dwarf any impact of the steel and aluminum proposals and trigger a sharp response from Beijing. Trump has said the fines could be huge. With Cohn’s departure, the profile of Peter Navarro, an anti-China economist who favors protectionist measures, appears to have risen within the White House. Navarro has written extensively of China’s military and economic threat to the United States in a series of books, including “Death by China: Confronting the Dragon — A Global Call to Action.” He has heavily backed the steel and aluminum tariffs in recent days. TRUMP PUSHES AHEAD Despite a rising tide of criticism from Republican lawmakers about the proposed 25 percent tariff on steel imports and 10 percent on aluminum imports, Trump on Tuesday reiterated his plan for the tariffs. Given the size of America’s trade deficit, Trump said the country would not be a loser in any fight. “When we’re behind on every single country, trade wars aren’t so bad,” he said at a news conference at the White House with the Swedish prime minister. Senate Majority Leader Mitch McConnell (R-KY) speaks after the Senate Republican weekly policy luncheon on Capitol Hill in Washington, U.S., March 6, 2018. REUTERS/Joshua RobertsHouse of Representatives Speaker Paul Ryan, a prominent Republican critic of the tariffs proposal, returned to the attack on Tuesday, saying the proposed duties were too broad. Although the measure is designed to hit China, its main impact will be on U.S. allies like Canada. Canada is the largest supplier of both steel and aluminum to the United States. Ryan, whose home state of Wisconsin
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