Life after Mid-term election, news by Hebei Longsheng Metals and Minerals co
| Life after the elections - influence with limited impact The change in control of the U.S. House of Representatives is unlikely to have a major impact on the implementation of trade policy by the Trump administration. There are four topics to watch: (1) The trade war with China, which covers 16.1% of all U.S. trade, is being carried out under the auspices of section 301 of the Trade Act which would be difficult to alter. That could change if there was a sustained decline in exports to China. (2) Passage of the U.S.-Mexico-Canada Agreement (USMCA) seems assured given President Trump has previously indicated a willingness to terminate the existing NAFTA deal if USMCA isn’t delivered. The automotive sector would pay the highest price should NAFTA be terminated as it accounted for $251 billion of trade between America and Canada plus Mexico, or 20.6% of the total. (3) The President’s use of the section 232 “national security” review process has had little impact on steel and aluminum imports (down just 7.0% in the third quarter vs. the second) and has proven controversial in its application to autos. Yet, with a two-thirds majority needed in the Senate – which Democrats did not “flip” – to pass veto-proof legislation it seems unlikely use of section 232 will be curbed either. (4) The most likely area of influence would be regarding future trade deals. Even there however the potential for bilateral tariff reductions of $12.4 billion with the EU and $4.1 billion with Japan provide compelling reasons to support the administration’s actions. |
