Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.
TRADEWINDS BLOWING
The song and dance around trade with China that has been going on for decades continues in the Trump Administration. The U.S. and China reached a trade agreement that allows the U.S. to import poultry from China as well as allowing foreign owned firms to publish credit ratings while insuring that China will still be able to import liquefied natural gas from the U.S.
Another key stipulation from the deal is that a delegation from the Department of Commerce will attend Xi Jinping’s international investment initiative next week. The deal is likely just the first step of many in trying to improve the country’s trade standing with China. Although the agreement shows an easing of tensions with China, it still leaves out many of the trade issues against which Trump campaigned.
LISTEN UP
The Trump Administration is beginning its push to shape legislation on tax reform. Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn met with Senators from the conservative Senate Steering Committee.
The meeting was the first of many promised listening sessions the Administration plans to have with lawmakers, industry groups and average citizens as they work through details of a plan they hope can pass the House and Senate. Mnuchin proposed his interest in moving the country to a territorial tax system where American companies would not face U.S. taxes on their foreign earnings.
The start of these conversations coincide with the House Ways and Means Committee holding its first hearing on tax reform next week.
CRA TAKES A BOW
The Congressional Review Act (CRA) reached the end of its tenure at midnight last night. Since the start of the 115th Congress, the CRA has been used to repeal 14 regulations, including three major rules, when it had only been used only one other time since it was enacted in 1996.
Congress repealed regulations that forced resource extractors to disclose payments, a Department of the Interior rule that aimed to protect streams from coal mining runoff, and a Department of Labor rule that didn’t allow people who receive unemployment benefits to avoid drug testing.
It wasn’t all fun and games for Republicans as they weren’t able to pass a Bureau of Land Management rule that would have ended methane caps on drilling on Federal lands. Now that Congress can’t use the CRA to overturn Obama era regulations, it is up to the executive branch to overturn any others via the conventional rulemaking process.
STRANGE BEDFELLOWS
In an interesting confirmation twist, Senators John McCain and Ben Sasse have decided to vote against President Trump’s U.S. Trade Representative-designate Robert Lighthizer, but progressive Democrat Senators Tammy Baldwin and Sherrod Brown have backed his confirmation. Sasse and McCain believe that Lighthizer does not understand the benefits of NAFTA and would not be a champion for agricultural interests in trade negotiations.
The swapping of the two Republicans for the two Democrats all but guarantees that Lighthizer will take the reins as the top trade chief after a confirmation vote Monday and rounding out Trump’s Cabinet. Now it’s onto the hundreds of other sub-Cabinet vacancies that are hampering progress at the agencies.
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