The following is the transcript of an interview with Gary Cohn, IBM vice chairman and former director of the U.S. National Economic Council, that aired on “Face the Nation with Margaret Brennan” on April 27, 2025.
MARGARET BRENNAN: And we turn now to Gary Cohn, who served as the top economic adviser in President Trump’s first term. He is now the Vice Chairman of IBM. Good to have you back, Gary.
GARY COHN: Thanks for having me.
MARGARET BRENNAN: So we saw the stock market rebound this week, and yet, you see in our polling data, you see in economic indicators that there is real concern about what is coming, even recession predictions. What are you seeing?
COHN: So I think we need to take a step back here. We entered the year with just unbelievable euphoric excitement about what was going to happen. We also entered the year with the market sort of priced for perfection. I think now, as we roll forward to where we are today, we’re sort of in a world where we’re in a price for realistic uncertainty, and uncertainty is not good for growth. So we’ve gone from this excitement to unpredictability, and the unpredictability has to do with where are we on the economy. And I think a lot of your data showed there’s still a little bit of confusion on the economy right now. What we have seen for the beginning of the last three months, in the early stages of the presidency, is we’ve seen the consumers starting to be a little bit concerned about tariffs. The concern about tariffs has driven them to preload or front-end buy a lot of the larger items that they were going to buy.
MARGARET BRENNAN: Buy them now, because they might be cheaper than in a few months.
COHN: We’ve seen automobile sales almost all-time record highs. So we see people buying automobiles because they’re trying to avoid tariffs. They’re buying consumer goods, they’re buying washing machines, they’re buying technology items. So we’ve seen the economy actually be in relatively good shape. So if you look at the actual data, what people would call hard data coming out of the economy right now, it looks pretty solid. If you look at the softer data, and the softer data is polling data, and you just showed some polling data, there’s an awful lot of economic polling data. You start to see much more weakness in the polling data. So if you look at consumer confidence, consumer confidence is an indication of what I’m thinking I’m going to do going forward, you start to see a lot more weakness in consumer sentiment and in consumer data. And I think that’s starting to play through the economy. This week, we started to see a lot of the major companies in America report earnings for the first quarter.
MARGARET BRENNAN: Right.
COHN: Now, remember that’s backwards looking, the first quarter, but companies also have a view of what’s going on in the second quarter. So you started to see some of the major consumer-facing brands say, look, our first quarter was pretty good, but we’re starting to see signs the second quarter is not going to be as good as we hoped. We saw it in fast food restaurants like Chipotle. We saw it in snack foods for Pepsi Cola. We saw it in the airlines. The airlines have talked about how difficult their restaurants are, and we’ve also seen it in the very high-end product. We saw it in LVMH is warning about sales slowing down. So we’re in this part of the economy where there’s this lack of predictability, there’s uncertainty and the consumers acting that way by sort of withdrawing from the market and only buying the essentials and the necessity products or products they think they can buy today because they may be more expensive tomorrow.
MARGARET BRENNAN: Or perhaps not on shelves tomorrow. That’s something that we heard some of these retail CEOs privately told the White House in meetings this week. And our Richard Escobedo reports that in a separate meeting, the Treasury Secretary told investors the booking of container ships that carry goods between China and the U.S., it’s down more than 60%.
COHN: Well, we’re seeing the data. We’re seeing the data coming out of China, and —
MARGARET BRENNAN: That means if people even want to buy it, it won’t be there.
COHN: So what people need to understand is the cycle from a good being sold in China, loaded on a vessel, sailed across the ocean, unloaded in the United States, put in a factory, distributed to a shelf, is about eight weeks in the United States. So if you go back to the April 2nd date when the tariffs kicked in, you’re talking about seeing the effect really May 2nd. So I would say the last couple weeks of, of, of, of May you’ll start, you’ll start seeing this effect here. So you know we’re a few weeks away from starting to see the early effects of what will happen in the transportation of goods. You’re also starting to see many of the small businesses, and this is where it’s really interesting, you know, small businesses who have to order goods, and you saw a lot of data out of the toy industry recently, the toy industry, which is really small industry runs the vast majority of retail toy sales. You know, people are ordering their toys for Christmas today, have to order those toys. Those toys are now coming with a massive 145% tariff. The vast majority of small business toy stores cannot order toys today because they cannot afford the 145% tariff. So they’re making a conscientious decision. They’re either going out of business or they’re just going to wait and see what happens. So you’re right, the lag effect of getting goods this country will not be felt for another two to four weeks.
MARGARET BRENNAN: And there are no active trade negotiations underway, according to the Treasury Secretary. There may be contact between the U.S. and China, but that’s not going to be a quick fix.
COHN: That said, the Treasury Secretary did acknowledge this week that the relationship between China and the United States is unsustainable. And I think we have to acknowledge that.
MARGARET BRENNAN: He, he said the trade war, right?
COHN: He said, he did say —
MARGARET BRENNAN: He pumped the brakes on that.
COHN: He did. He did. But at the end of the day, the trading issue really has started, for better, to coalesce around the China issue. I think we’re all starting to realize that the country we’re most dependent upon in the United States and for our shelves and what we would miss the most would be what comes out of China.
MARGARET BRENNAN: We knew that. You knew that.
COHN: We’ve always known that. We’ve always known that.
MARGARET BRENNAN: You told President Trump that during the first term.
COHN: We’ve known it. But the fact that the Treasury Secretary is acknowledging that we are in an unsustainable situation, and we have to start negotiating with the, with the Chinese is very important.
MARGARET BRENNAN: They also have to say we’re ready to talk, and they haven’t yet. In fact, the Chinese seem to be really holding the line on this so far. But I also want to ask you about what President Trump has said because when you’re talking about what’s coming down the line, he’s indicated that it could be up to the Fed, the Federal Reserve, to cut interest rates to sort of make up for what happened. He did pull back on his threat to fire the Fed chair. Do you think there is an interest rate cut that’s necessary?
COHN: So I think the Fed is doing exactly what they were empowered to do. The Fed is an independent agency with a dual mandate. And their dual mandate, very simply stated, is full employment on one side, and stable prices. And their definition of stable prices is an inflation rate at or around 2%.They are in a position right now where they’re basically at full employment, inflation at about 2.4%. So they’re basically saying we have done our job right now. So there is, in essence, really no reason for us to take action at this moment. And on top of that, we have this unpredictable economy. We have this potential instability. We know that the Customs Border Patrol is starting to collect more and more tariff money every day. We know that those costs have to feed through the economic system. We predict that that will be inflationary, even if it’s just a one time price shock.
MARGARET BRENNAN: Right.
COHN: So there are those that say, look, it is a one time price shock, it’s not inflationary. But the one time you move prices up, if you’re not moving wages up commensurate with the one time price move, every American is losing purchasing power. So if you have a fixed price wage, but the cost of goods goes up once, you can purchase less.
MARGARET BRENNAN: So on that point, the President also says you may pay more here, right, but I got you on the tax cuts. In fact, he tweeted when tariffs cut in, just this morning he said this, many people’s income taxes will be reduced or eliminated, and he’s going to focus on those making less than $200,000 a year. This is not going to get done by Memorial Day, is it?
COHN: Look, I don’t, I don’t know. That would be very fast for it to get done. The other thing we need to understand about tariffs, and I think this is obvious, is tariffs are highly regressive. Meaning that poorer people end up paying a disproportionate percentage of the tariffs.
MARGARET BRENNAN: Right.
COHN: Because they spend 100% of their paychecks on goods. So they’re going to Walmart, they’re going to their stores. They’re buying goods with their paycheck. Wealthier people send it, save a bigger percentage of their paycheck. So the tariffs are going to affect the poorer people more.
MARGARET BRENNAN: We got to leave it there, Gary. We’re going to watch this though.
COHN: Okay.
MARGARET BRENNAN: All right, Face the Nation will be back in a minute. Stay with us.
