Democrats’ new majority in the House will bring the Trump administration’s past trade actions, as well as those under consideration, into sharper focus. Trade is shaping up to be a key issue heading into the 2020 election cycle, with President Donald Trump’s “protectionist” rhetoric aligning with that of progressive Democrats and at odds with lawmakers who favor free-trade policies. Trade will be seen through this strange dichotomy as Democrats seek to undermine the president and scuttle his agenda through oversight while trying to protect and advance their own trade policy positions.
1. Current and Pending Trade Deals. The U.S.-Mexico-Canada Agreement (USMCA) is due to be signed by the leaders of the three countries by the end of November, but the hard-won policies in the agreement face an uncertain future. Incoming Ways and Means Committee Chairman Richard Neal, D-Mass., and likely Trade Subcommittee Chairman Bill Pascrell, D-N.J., have thus far struck a pragmatic and open-minded tone regarding USMCA, while warning that the bar for their support will be high. The timeline of consideration for the USMCA is also a challenge. Once the agreement is signed Nov. 30, the administration has 60 days to indicate changes in federal law necessary to implement the agreement and another 45 days to issue a report on those changes. Congress will review the agreement for an additional 30 days before introducing implementing legislation, and then lawmakers have 90 days to pass a final bill through both chambers. This sets up at best a mid-2019 completion date.
Neal and Pascrell have also indicated that they expect Congress to be an equal partner in decisions regarding potential new trade deals with the European Union, the United Kingdom and Japan. Democrats are likely to push a resolution sponsored by Pascrell requiring the administration to give Congress documents related to its decisions regarding Chinese steel and aluminum tariffs.
2. China. The impact of the latest tranche of tariffs on Chinese steel and aluminum and other goods likely will not be felt until the fourth quarter of this year. Beginning Jan. 1, tariffs will increase from 10 percent to 25 percent, and new goods will be targeted. Trump has threatened to levy tariffs on all $500 billion in annual Chinese imports, but he’s also hinted that a deal could be in the offing. Trump and Chinese President Xi will be meeting before the end of the year and could head off a trade confrontation with successful one-on-one negotiations.
While Neal has applauded the administration’s intent, he has expressed concern about its methods and approach to the use of tariff authority. Expect the Ways and Means Committee to hold oversight hearings and highlight the impact of Trump’s policies on U.S. consumers and jobs, with particular attention on companies and industries with exposure to global supply chains.
3. Europe. The fallout from the U.S.-China trade salvos has reached Europe, as World Trade Organization representatives – including the European Union – have been asked to referee multiple disputes arising from the escalating situation. The United States has issued a warning to the E.U., and Trump has singled out individual countries in his rhetoric, going so far as to threaten to levy tariffs on European auto imports, citing potential national security concerns. Sen. Rob Portman, R-Ohio, has thrown cold water on the notion, pointing out that tariffs could raise auto prices in the United States on average by $2,000 and cost more than 600,000 domestic jobs. The senator has even gone so far as to introduce legislation that would require the Pentagon, not the Department of Commerce, to determine if an import poses a national security threat. Democrats on the Ways and Means Committee will be sure to highlight these figures, as well as the divisions between the president and his party on Capitol Hill.
4. Senate Finance Committee. The all-important Senate Finance Committee, which has jurisdiction over trade policy, will welcome a new chairman next year after the retirement of Chairman Orrin Hatch, R-Utah.
Sen. Chuck Grassley, R-Iowa, is expected to relinquish the chairmanship of the Judiciary Committee to take over the Finance Committee. But if Grassley elects to stay at the Judiciary Committee, Sen. Mike Crapo, R-Idaho, would be next in line at the finance panel. Crapo has been critical of the president’s steel tariffs and, like Grassley, represents an agriculture-heavy state that hasn’t fared well under recent tariffs.
Regardless of who chairs the committee, all current and future tariffs will come under scrutiny, and the ratification of the USMCA will provide the platform to air out policy concerns, as the committee is populated mostly by free-traders on both sides of the aisle.