What the Midterm Election Results Mean for the Trade Agenda

On Tuesday, Americans came out in record numbers to elect their representatives into the House and Senate. Some saw the election as a referendum on President Trump and the direction his administration has taken over the past two years. Others were focused solely on local issues. Across the board, however, Americans elected more women, people of color and people from the LGBTQ community than ever before. While a number of seats have not been finalized, it is apparent that the Republican party will remain in control of the Senate and the Democratic party will take control of the House. So what does this mean for the President’s trade agenda?

The current trade agenda

In the past, President Trump has not been shy about his desire to enforce more protectionist trade measures such as blanket tariffs against China and the European Union (EU), as well as his discontent with NAFTA. His administration imposed section 232 tariffs on steel and aluminum and 301 tariffs on China. Our trade partners have begun to impose retaliatory measures, with China targeting $60 billion worth of goods and Canada targeting consumer goods like whiskey and orange juice. All told, The US has been the subject of retaliatory tariffs from our three largest trading partners – China, the EU, and NAFTA (Canada and Mexico) – disproportionately affecting agricultural and metals-based industries in the US. These areas are typically rural, more conservative and overwhelmingly supportive of President Trump. But with these retaliatory tariffs, American farmers are seeing soybeans rotting in the fields in GOP strongholds like North Dakota and manufacturers like Harley-Davidson are moving production outside of the US.

Party trade agendas

Historically, the GOP has championed free trade with the Democrats being more wary, citing fears of losing manufacturing jobs to relaxed labor laws in developing countries. However, with the rise of the Trump administration, the party stances on trade have appeared to switch, with the GOP adopting Trump’s more protectionist rhetoric and Democrats promoting free trade, exports and global alliances. Whether this shift is a direct result of the ideology coming out of the White House or a reflection of the shifting demographics in the country, especially of Democratic supporters, remains to be seen.

The real question to ask, however, is now that the Democrats control the House, what does that mean for Trump’s protectionist trade agenda?

Trade under a Democratic House

To some extent, one can assume that a party that has maintained such vocal opposition to the current administration will do anything in their power to limit the success of the President’s agenda. As historical proponents of trade protectionism, will the Democrats find an unlikely ally in Trump’s trade agenda or will they oppose his measures to acknowledge the shifting demographics of their supporters? The answer remains murky. The midterm elections have shown that the Democrats are a party led by women, people of color and members of the LGBTQ community. They have shown that the Democrats are the party of urban and suburban communities, with the GOP dominating rural and exurban America. Typically, these urban communities are proponents of free trade. Democrats also appeared to pick up districts dependent on agriculture in Iowa and Kansas, districts potentially negatively impacted by a trade war. However, the Democrats seemed to recapture their pro-protectionism blue-collar union-heavy base, as evidenced by the pick-ups in Pennsylvania and upstate New York.

Can the Democrats change the trade agenda?

The short answer to this question is no. The White House maintains wide-reaching authority through executive orders and the fast-track authority to push its agenda. However, the Democratic-run house has the ability to make accomplishing Trump’s agenda more complicated and difficult.

In the immediate-term, Congress is still in the middle of its 90-day review of the United States-Mexico-Canada Agreement (USMCA) put in place to replace NAFTA. The house is not set to vote on the USMCA until 2019 and Democrats could conceivably vote against the deal because the administration failed to adhere to the fast-track process during negotiations. In the end, the USMCA will likely pass. The agreement is very similar to NAFTA and Democrats have signaled a desire to maintain and strengthen alliances and reduce retaliatory tariffs rather than make a symbolic move. The treatment of the USMCA could signal how Democrats will handle future trade negotiations – including deals with the EU, United Kingdom, and Japan.

In the medium-term, Democrats hold a bit more power, as the administration will likely need Congress’ help in providing relief to industries hurt by retaliatory tariffs, such as farmers and manufacturers. As the Trump administration moves to negotiate and renegotiate more deals with allies, it remains to be seen if the Democratic House will prioritize global economic security and our relationships with our allies or preventing Trump from achieving any more political wins. Should the administration continue with rhetoric suggesting imposing tariffs on the EU or withdrawing from the WTO, it is likely the House can, and will, intervene to prevent these from actually occurring.

The trade war with China is not likely to change significantly, despite the Democrats’ potential desire to deny a political win. There is generally bipartisan support for a tough stance on Chinese trade, especially concerning intellectual property. In this unique instance, the middle-term agenda item reducing the trade deficit with China may actually see some support from House Democrats.

In the long-term, as with many responses to the efforts of the Trump Administration, the largest policy changes could be a renewed separation of powers. If the Democrats are hoping to rein in an executive branch they believe has overstepped its authority, trade and tariffs may be the ideal opportunity. The Constitution grants only Congress taxation authority, including the imposition of tariffs. However, in the 1960s and 1970s, much of the authority to impose tariffs was delegated away from Congress to the Executive Branch. This is how President Trump, and several presidents before him, were able to impose tariffs and negotiate trade agreements under the fast-track authority. Wresting tariff-setting authority away from the White House and back to Congress under constitutionally mandated taxation authority can potentially allow the new Democratic House majority to act as a check against President Trump’s trade agenda.

Ultimately, the Democrats will have to come to terms with the increasing diversity of ideals within their base as they look to develop their response to Trump’s trade agenda. Will Democrats shift with their urban and suburban supporters who see free trade as a way to strengthen relationships with allies and lower the costs of consumer goods or will they tack back toward their populist roots, wary of the potential losses in manufacturing jobs associated with free trade? Will Democrats oppose tariffs and trade agreements pushed by President Trump to deny him a political win or will they move to support the protectionist measures historically favored by the party? Only time will tell.

Amelia Shister is part of the GovLoop Featured Contributor program, where we feature articles by government voices from all across the country (and world!). To see more Featured Contributor posts, click here.

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