Nov 8, 2018

What Might a New Congress Mean for Trade?

Daniel Griswold Director of Trade and Immigration, Christine McDaniel Senior Research Fellow

Christine McDaniel

We may have some new members of Congress, but the problems with tariffs remain the same, and the need for greater market access remains the same.  The key priorities for Congress in the near term include:

  1. Congress must find a sustainable solution with China because tariffs are not the answer. To the extent nonmarket economy practices need to be resolved, the US should work with like-minded countries on World Trade Organization (WTO) reform.  That includes resolving outstanding issues and restoring the dispute settlement mechanism, which the United States has used effectively and successfully over the past 20 years, and which we will need in the future. 
  1. We should finalize the US-Mexico-Canada Agreement (USMCA) to restore investor confidence across the North American region and lift the section 232 tariffs on imports from Canada and Mexico as promised.
  1. Trade policy should focus on opening markets for US firms and revisiting the Trans-Pacific Partnership. This would allow us to retake the helm on big issues that need market-oriented direction, such as data privacy and digital trade. Japan and the European Union are good partners on these issues, but the US should be at the table, not on the sidelines.

Daniel Griswold

It’s unlikely that the mid-term election results will moderate President Trump’s trade agenda. Republican House leaders failed to restrain the president’s escalating tariff wars because they didn’t want to challenge a president of their own party. Democratic House leaders in the new Congress are unlikely to challenge the President on China and steel because they largely agree with him.

One complication for the White House may be that a Democratic-controlled House will be more skeptical toward approving the revised USMCA. The changes the administration made to NAFTA have failed to win over any significant support from Democrats, and Democratic House leaders may be reluctant to advance a part of the president’s trade agenda that most of their caucus doesn’t support.

Photo credit: Getty Images North America

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