Former Trump Economic Adviser Calls Tariffs a Tax on Americans and Proposes Scaling Back Duties on Canada

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Tariffs intended to protect American industries are increasingly becoming a source of concern for American consumers, and one of Donald Trump’s former top economic advisers is now challenging the administration’s approach.

Gary Cohn, who served as director of the White House National Economic Council during Trump’s first presidency, warned on November 10, 2026, that tariffs effectively function as a consumption tax on Americans. Speaking at a major business summit in Washington, Cohn proposed a potential bipartisan compromise that would preserve stronger trade protections against China while reducing tariffs on Canada.

His comments arrive after Democrats secured control of Congress in the November 3 midterm elections, with affordability and rising prices dominating economic concerns. While the White House insists its tariff strategy will continue, Cohn’s intervention raises important questions about the costs of protectionism, the future of North American trade, and whether Washington can find a more balanced approach.

Gary Cohn Challenges the White House Over Tariff Costs

Gary Cohn’s criticism carries particular weight because he previously helped shape Trump’s economic agenda. Cohn served as director of the National Economic Council from 2017 to 2018, after holding senior leadership positions at Goldman Sachs. Now vice chairman of IBM, he remains closely connected to the corporate world affected by American trade policy. During the B20 USA Summit in Washington on November 10, Cohn challenged the argument that tariffs primarily impose costs on foreign countries. Instead, he emphasized that American businesses and households ultimately absorb much of the financial burden.

His intervention came during a gathering of international business executives and policymakers hosted by the U.S. Chamber of Commerce. The summit brought together leaders discussing economic growth, supply chains and international investment. Cohn’s remarks stood in contrast to the administration’s continuing support for import duties. Rather than advocating an unconditional return to free trade, he suggested a more selective strategy that would distinguish between close economic partners such as Canada and competitors such as China.

Why Cohn Says Tariffs Are Really Taxes on Americans

Cohn summarized his argument by describing tariffs as a consumption tax on American consumers. Under U.S. customs rules, importers are legally responsible for paying duties when products enter the country. Businesses can respond by accepting smaller profit margins, negotiating lower supplier prices or increasing what customers pay. When those higher costs reach retail shelves, consumers effectively contribute to the expense. This distinction matters because tariff revenue collected by Washington does not necessarily represent money transferred from foreign governments. Much of it originates with companies operating in the United States.

Economic research supports the concern, although the precise distribution of costs varies. A 2026 Federal Reserve Bank of New York study estimated that approximately 26% of a tariff increase passes through to consumer goods prices over twelve months. The researchers also found that tariffs can raise prices for domestically produced goods through more expensive imported inputs and reduced competition. For households already managing groceries, insurance and transportation expenses, even relatively modest increases across several categories can become financially significant.

His Proposal Would Ease Canadian Tariffs While Keeping Pressure on China

Cohn’s proposed compromise offers an alternative to the increasingly polarized American trade debate. He suggested that Trump could work with the incoming Democratic-controlled Congress to establish lasting protections against unfair Chinese trade practices while rolling back tariffs on Canada. The arrangement would allow Republicans to preserve important elements of their trade agenda while giving Democrats an opportunity to address rising consumer costs. It would also recognize that different trading relationships present different economic and strategic challenges, making a uniform tariff approach potentially less effective.

The proposal is significant because it does not require either political party to abandon its broader objectives. Washington could maintain measures intended to address Chinese industrial competition while reducing financial pressure on businesses involved in North American production. However, Cohn presented the idea as a possible political agreement, not an arrangement already accepted by the administration. Its success would require cooperation between Trump and Democratic lawmakers, agreement on which protections should remain and decisions about how much tariff relief Canada would receive.

Canada’s Importance to the U.S. Economy Makes the Dispute Different

Canada is not simply another supplier competing for American customers. The two countries operate highly integrated manufacturing, agricultural and energy systems that depend on goods moving across the border. According to the Office of the United States Trade Representative, bilateral trade in goods and services reached approximately US$872.3 billion in 2025. That included US$333.6 billion in American goods exports to Canada and US$381.9 billion in imports from Canada. These figures demonstrate why trade disruptions can affect manufacturers, retailers and workers on both sides of the border.

The automotive industry illustrates the relationship particularly well. A vehicle assembled in Michigan may contain Canadian-produced components, while a plant in Ontario may rely on parts manufactured in the United States. Similar connections exist in machinery, metals, food processing and energy. Statistics Canada reported that 71.7% of Canadian merchandise exports went to the United States in 2025. For businesses dependent on these relationships, higher tariffs can increase production expenses, complicate purchasing decisions and reduce competitiveness. Cohn’s proposal recognizes the importance of distinguishing closely connected supply chains from trade relationships involving substantially different strategic concerns.

Canadian Industries Are Already Facing Significant U.S. Tariffs

The current dispute extends beyond a single tariff announcement. In July 2026, the Trump administration invoked Section 338 of the Tariff Act of 1930 to impose additional 50% duties on selected Canadian goods. The measures subsequently affected products including furniture, plastics, industrial machinery, paper products and sports equipment. Unlike many existing tariff arrangements, the Section 338 duties also apply to covered products that otherwise qualify for preferential treatment under the Canada–United States–Mexico Agreement. This created another layer of uncertainty for exporters accustomed to established North American trade rules.

Washington modified the scope of some of these duties in October, removing certain products while adding others. However, those adjustments did not amount to a general elimination of Canadian tariffs. Separate restrictions affecting industries such as steel, aluminum and automobiles have also remained central to negotiations. Canada responded to the escalation by introducing retaliatory tariffs on selected American products, generally matching the applicable U.S. rates. This creates costs in both directions, with Canadian importers facing additional expenses while American exporters encounter more difficult conditions in their largest neighbouring market.

Higher Tariffs on Metals Can Affect the Price of American Vehicles

The automotive sector offers a practical example of Cohn’s concerns. Steel and aluminum are important materials in vehicle manufacturing, and American producers rely on both domestic and imported supplies. When tariffs increase the cost of Canadian metals, manufacturers purchasing those materials may face higher production expenses. Automakers can respond by negotiating with suppliers, adjusting production plans, accepting reduced margins or increasing vehicle prices. Cohn specifically pointed to aluminum duties as an example of how tariffs can eventually affect Americans purchasing new cars.

The financial consequences extend beyond vehicle manufacturers. Companies producing replacement parts, commercial equipment and other metal-intensive products can face similar pressures. Higher input costs can also make domestic production more expensive, potentially weakening the competitive advantages tariffs are intended to create. Relief would not necessarily translate into immediate showroom discounts because manufacturers operate under contracts, inventory cycles and broader pricing strategies. Nevertheless, reducing duties on important industrial materials could ease some of the financial pressure throughout the supply chain, particularly where Canadian imports remain difficult to replace economically.

Inflation Data Adds Urgency to the Debate Over Tariffs

Cohn’s warning arrived alongside fresh evidence that American households continue to face significant price pressures. The U.S. Bureau of Labor Statistics reported that consumer prices increased 0.4% in October 2026, following a 0.6% rise in September. Food prices climbed 0.5% during October, while shelter costs increased 0.3%. The index excluding food and energy also rose 0.3%. September’s annual inflation rate was 3.7%, although an official annual comparison for October could not be calculated because comparable October 2025 data were unavailable.

Tariffs are not responsible for every increase. Energy disruptions associated with the Iran conflict, housing expenses and medical costs have also influenced household budgets. However, Federal Reserve research indicates that tariff-related price increases can emerge gradually, including through domestic manufacturers that depend on foreign components. This delayed effect creates an additional challenge for policymakers because reducing tariffs today may not immediately reverse previous increases. For a family replacing a vehicle, repairing a home or buying everyday necessities, the distinction between different sources of inflation matters less than the total cost appearing on the bill.

The White House and Business Leaders Remain Divided

Despite the concerns raised by Cohn, the Trump administration has shown little willingness to abandon its broader tariff strategy. Jim Goyer, a senior White House official, defended the policy during the same B20 summit, arguing that tariffs support domestic manufacturing, strengthen supply chains and advance national security objectives. He indicated that the administration intends to continue pursuing its trade agenda throughout Trump’s remaining term. This position reflects the White House’s belief that short-term economic costs may be justified by longer-term industrial and strategic benefits.

Business executives are divided over that assessment. Dow executive chairman Jim Fitterling acknowledged that tariffs can raise prices but defended their use against unfair competition and threats to American manufacturing. Other corporate leaders have emphasized the need to diversify supply chains and establish more predictable commercial relationships. UPS chief executive Carol Tomé described businesses increasingly moving toward regional sourcing and production. These competing perspectives reveal a difficult policy balance: tariffs can provide protection for certain domestic producers while simultaneously increasing costs for manufacturers that rely on imported materials and components.

Democratic Midterm Victories Could Increase Pressure for Tariff Relief

The political environment changed significantly after the November 3, 2026, midterm elections. Democrats secured control of both chambers of Congress following a campaign in which affordability became a major issue. A Reuters/Ipsos survey conducted between November 6 and 9 found that 62% of American adults supported efforts to repeal tariffs imposed by the Trump administration. The survey questioned 1,705 adults and carried a margin of error of approximately two percentage points. It also found broad support for Congress to prioritize cost-of-living concerns during its first 100 days.

Democrats are expected to use their new congressional majorities to challenge Trump’s tariff policies after taking office on January 3, 2027. However, winning control of Congress does not automatically give lawmakers the ability to dismantle existing trade restrictions. Trump retains substantial executive authority over trade decisions and can veto legislation passed by Congress. Overriding a presidential veto generally requires two-thirds support in both chambers. These limitations explain why Cohn’s proposed compromise could become relevant: an agreement negotiated between the White House and congressional leaders may offer a more practical route to meaningful relief than a prolonged legislative confrontation.

Canada Faces a Complicated Choice as Trade Negotiations Continue

For Canadian Prime Minister Mark Carney, Cohn’s proposal represents a potentially encouraging development, but it does not resolve the country’s immediate negotiating challenges. Canada suspended trade negotiations in August after rejecting American demands it considered economically unacceptable and incompatible with Canadian sovereignty. Discussions have since shown signs of progress, with Carney indicating in November that Washington had moved away from some demands involving French-language protections, cultural programming and Canada’s ability to negotiate trade agreements with other countries. Important disagreements nevertheless remain unresolved.

Carney has also emphasized that the Trump administration remains Canada’s principal negotiating counterpart despite the Democrats’ election victories. Ottawa must therefore consider whether to accept an agreement offering partial tariff reductions or continue pursuing broader restoration of free trade. For Canadian manufacturers and workers, the outcome could influence investment, production and employment decisions well beyond the current political cycle. Cohn’s intervention creates another argument for reducing barriers between the two economies. Whether that argument leads to policy changes will depend on the willingness of political leaders to balance industrial protection, consumer affordability and the long-term economic value of North American cooperation.

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