What Gary Cohn And Steve Mnuchin Really Said About Trump's Canadian "Trade War"

For the past two days everyone has been scrambling to try to figure out the reasoning behind Trump's latest flip-flop on NAFTA.  Speculation and rumors behind the controversial flip, which is sure to annoy some of his most ardent supporters, have ranged from Trump being convinced by Wilbur Ross that it would result in massive jobs losses in key battleground states to very convincing calls directly to Trump from Mexican President Pena Nieto and Canadian Prime Minister Justin Trudeau.  But, a new revelation from the Wall Street Journal seems to suggest that former Goldmanites Gary Cohn and Steve Mnuchin, the globalist faction of Trump's White House, have been pulling the strings on trade behind the scenes from day 1.

Per the WSJ, the conventional story behind Trump's NAFTA flip goes something like this:

As rumors spread of the possible action, Mexican President Enrique Peña Nieto called the president urging him not to pull out of the accord. “Let me think about it,” Mr. Trump said. Within a half hour a call came in from Canadian Prime Minister Justin Trudeau with a similar request.


After the talks, Mr. Trump was convinced “they’re serious about it and I will negotiate rather than terminate,” the president said in an interview with The Wall Street Journal on Thursday.


Meanwhile, Sonny Perdue—the agriculture secretary who took office two days earlier—and Commerce Secretary Wilbur Ross met with Mr. Trump and showed him a map indicating the states where jobs would be lost if the pact collapsed, according to a person familiar with the matter. Many were farm and border states that voted heavily for Mr. Trump.


Those conversations, along with a flood of calls to the White House from business executives, helped steer Mr. Trump away from an idea that some of his own advisers feared was a rash and unnecessary threat to two trading partners who fully expected to renegotiate the agreement anyway.

Of course, "bigly" changes to the NAFTA deal were a key campaign promise made to voters throughout 2016, mostly because of this chart:

Trade Balance


But despite the illusions of a last-minute flip-flop, at least one senior bank executive in Toronto confirmed to the WSJ that Gary Cohn and Steve Mnuchin, both former Goldmanites and now serving as Chair of the White House National Economic Council and as Treasury Secretary, respectively, have been reassuring Canadian businesses executives for weeks that there would be "no significant Nafta changes."

Watching events play out, veterans of past White Houses say Mr. Trump needs a more consistent, unified message. Part of the trouble may be that his White House is split into factions: a nationalist wing symbolized by chief strategist Steve Bannon that is wary of multinational treaties and trade deals, and a more mainstream group that is comfortable with the trend toward globalization.


That mainstream group has been actively sending reassuring signals to business leaders in other countries, even as they have been locked in internal battles in Washington.


One senior Toronto bank executive said Gary Cohn and Steven Mnuchin —former Goldman Sachs Group Inc. executives now serving as chairman of the White House National Economic Council and as Treasury Secretary, respectively—have on a few occasions reached out to senior Canadian business officials in recent weeks to counsel them that despite the internal Trump administration divides over trade policies, they expect no significant Nafta changes.


“This is a disputatious White House and we have to understand this is going to spill out into the public,” the Canadian banker said.

Of course, it's unclear what all of this means exactly.  Is this last minute flip-flop just more 'smoke and mirrors' masterfully orchestrated by Trump to save face while flip-flopping on another campaign promise...like that whole sanctuary city funding executive order that we recently found out only impacted roughly $1mm of federal funding and was "merely an exercise of Trump's "bully pulpit" to "encourage communities and states to comply with the law."  Or, is Trump just the easily influenced face of a White House that is being run behind the scenes by Bannon, on the one hand, and the Vampire Squid on the other?

Luckily, Trump cleared up all the confusion:

“Hey, I’m a nationalist and a globalist.  I’m both. And I’m the only one who makes the decision, believe me.”