DC on Holiday But January Should See Positive Trade News
Just as on Wall Street, things slow down during the holidays in Washington, D.C., at least slower than normal.
Nevertheless, President Donald Trump is likely to return for a January filled with positive headlines on trade, one of his principal campaign issues. The White House sent out signals that the Phase One trade deal with China was nearly drafted and a January White House signing ceremony was in the initial stages of talks with Beijing.
Additionally, the Senate is poised to approved revised NAFTA trade deal with Mexico and Canada, known as the USMCA.
In 2020 investors might find it hard to separate policy from politics as every action has some connection to the Presidential race. The President’s narrow margin of victory in Michigan, Wisconsin, and Pennsylvania was made possible due to large pluralities in rural parts of the three states.
Unsurprisingly then, the trade news will focus on the pluses for farmers. Agricultural interests have long been among the chief advocates of approving the USMCA as it is viewed as a big win for American farmers. With the more difficult vote in the House now complete, Republicans should be able to stage manage a big vote and appropriate victory march for the President when USMCA is approved.
Similarly, while the text of the Phase One China treaty hasn’t been released it is expected to include large purchases of American agricultural products by the Chinese. Both trade events will show the advantages an incumbent President has to control the news cycles.
Democrats in the House of Representatives—with impeachment (perhaps), the FY 2020 budget and USMCA behind them—are reportedly working to put together a large infrastructure bill. When Democrats took control of the House in 2018 most observers thought infrastructure might be a potential issue for the House to work with President Trump. But it has become increasingly clear that Senate Republicans are not interested, and with the President’s need for strong Republican Senate support on impeachment he is unlikely to fight them on infrastructure; hence any bill is likely to be a one chamber exercise.
Speaking of impeachment, Alaska Republican Senator Lisa Murkowski made headlines as the first Republican to publicly break with the strategy to form a partnership between the Senate jurors and the White House defendant. However, the headlines were more bark than bite as the President continues to have the overwhelming support of the 53 Senate Republicans, and there is little appetite by the Senate Republicans to chastise a President they believe will lead them to victory in 2020.
A Happy New Year and 2020 to all our clients and subscribers.
Figure: Top Trump Tweets
