Trade Update (January 21)
|Shutdown Turns Ugly Between Trump, Pelosi
As of Friday (Jan. 18),the partial government shutdown over the continued fight for border wall funds has lasted 28 days, now the longest shutdown in US history. As a result of the continued shutdown, House Speaker Nancy Pelosi (D-CA) requested that President Trump postpone his State of the Union (SOTU), which had been scheduled for January 29. The speaker typically invites the president to make the annual address in person and has done so on almost every occasion since 1913, but Pelosi cited security concerns related to the partial government shutdown’s effect on the U.S. Secret Service.
“Sadly, given the security concerns and unless the government re-opens this week, I suggest that we work together to determine another suitable date after government has re-opened for this address or for your to consider delivering your State of the Union address in writing to Congress on January 29th,” Pelosi said in the letter penned to the White House. She also stated that since the start of modern budgeting in FY 1977, a SOTU has never been delivered during a government shutdown.
On Thursday, President Trump responded with a letter of his own that stated he would cancel her planned congressional trip to Egypt, Brussels, and Afghanistan, similarly citing the shutdown as reason to postpone the trip. Her delegation had planned to visit troops and obtain intelligence briefings from those on the front lines, according to a spokesman from her office.
Senate Majority Leader Mitch McConnell (R-KY) cancelled the Senate’s planned MLK Day recess. The Senate will be in session, but there will be no votes scheduled during the week. Majority Whip John Thune (R-SD) echoed McConnell’s comments, stating “We’ll be in session, but votes will be contingent on whether there is something we can vote on. Right now we’re at an impasse.”
Markets Up As US-China Trade Talks Progress
The DOW Jones Industrial Average, European markets, and Asian markets all posted gains this past week as potential progress is made in continued trade negotiations between the U.S. and China.
The major averages jumped to their highs of the day after sources told CNBC that China had offered a six-year increase in U.S. imports during recent trade talks. Bloomberg News reported on Friday that the deal would aim to reduce the annual U.S. deficit to zero by 2024.
Treasury Secretary Steve Mnuchin reportedly floated the prospect of easing tariffs on Chinese goods, while China reportedly offered a six-year increase during recent talks between trade officials. The White House has set March 2, 2019, as the deadline for another series of tariffs on roughly 40 percent of annual American imports from China if no long-term deal is reached.
Commerce Officially Furloughing
The Department of Commerce will toll filing dates and deadlines until the partial government shutdown ends. Historically, the department will toll a day for every day of closure. Instead, a final determination date will likely occur in April.
Steel and Aluminum Tariffs Update
Canadian Ambassador to the US David MacNaughton stated this week that he believes the US will pass the revised trade deal, (USMCA), and simultaneously lift tariffs on steel and aluminum. The tariffs, 25 percent on steel and 10 percent on aluminum, were applied in 2018 under the Section 232 trade provisions, which forced Canada to levy its own tariffs on the U.S.
“The 232 tariffs are illegal, they’re unjustified, to consider Canada as a national security threat is absurd, so we continue to press the Americans to drop those tariffs,” MacNaughton said. “These tariffs don’t make any sense at all and I am confident that at some point in the near future, we’ll be able to get rid of them.”
The new trade deal includes a cap on levels of vehicles, and vehicle parts that Canada can sell to the U.S. tariff-free without facing another potential 232 tariff. The U.S. has been pushing for a similar type of quota on steel and aluminum. MacNaughton downplayed the likelihood of a new quota, saying the trade deal’s clause “wasn’t a quota, it was more of an insurance policy.”
The House and Senate are in session next week. The MLK Recess was cancelled due to the ongoing government shutdown. As aforementioned, there are no Senate votes scheduled, but both chambers will be in session.
 Mangan, Dan. Schwartz, Brian. “Nancy Pelosi to Trump: Reschedule State of the Union address or just submit it in writing to Congress because of shutdown.” CNBC. 16 Jan. 2019. https://www.cnbc.com/2019/01/16/pelosi-to-trump-reschedule-state-of-union-or-submit-in-writing.html
 Imbert, Fred. Amaro, Silvia. “Dow jumps more than 350 points after China offers a way to eliminate US trade imbalance.” CNBC. 18 Jan. 2019. https://www.cnbc.com/2019/01/18/stocks-us-china-trade-talks-take-center-stage-shutdown-earnings.html
 Bradsher, Keith. “Talks to End US-China Trade War Now Shift to Make-or-Break Rounds.” The New York Times. 9 Jan. 2019. https://www.nytimes.com/2019/01/09/business/us-china-trade-talks-beijing.html
 Wingrove, Josh. “Tradeau’s US Envoy Confident on USMCA Passage, Tariff Relief.” Bloomberg. 18 Jan. 2019. https://www.bloomberg.com/news/articles/2019-01-17/trudeau-s-u-s-envoy-confident-on-usmca-passage-tariff-relief