The impeachment process rolls on, with the House’s partisan bill of impeachment heading towards the senate and a partisan acquittal. As with a mystery movie the ending of which has been tipped by a reviewer, so with impeachment — the end is known, making the process less than riveting viewing. Which might be why Democratic candidates for their party’s presidential nomination, report that as they trudge from coffee shop to hamburger joint to rural church to meet and greet Iowa’s voters, no one, not a single voter, is asking about impeachment.
Add to that the timing of important distractions. The day the House committee approved two articles of impeachment was “probably the most momentous day in trade history ever”, according to US Trade Representative Robert Lighthizer. A bit of hyperbole surely: one thinks of Hawley-Smoot, the establishment of the World Trade Organization, and day that Trump decided enough is enough, and laid tariffs on Chinese goods.
Still, desperate to show voters that Democrats can do more than impeach, immediately after committee approval of the articles of impeachment, and after bottling the deal up in the House for about a year, speaker Nancy Pelosi announced Democrats’ readiness to approve the President’s NAFTA2, or USMCA (US-Mexico-Canada Agreement), as Trump prefers to call it. And did just that last week, sending the bill to the Senate for certain approval as soon as it gets the acquittal of the President out of the way, a process being delayed by speaker Pelosi’s refusal to send the articles of impeachment to the senate until she is satisfied with the trial procedures established by the senate. Majority Leader McConnell’s refusal to accede to this probably unconstitutional power grab is reported in a New York Times page-one story headlined, “McConnell sets Collision Course On Impeachment.”
There are considerable disagreements as to the likely effect of USMCA, with predictions ranging from very little to a great boost for jobs and GDP. Treasury secretary Steve Mnuchin says the deal will add half of one percent to GDP growth.
One aspect of the deal is worth noting, especially but not only in Britain. “A new construct for trade,” says Richard Neal, the Democratic chairman of the House ways and Means committee. “A model for American trade deals going forward,” claims USTR Lighthizer. White House sources say it is the template for all future trade deals the President will negotiate.
Tariffs on digital products are prohibited; anti-spam laws are a must as is protection for proprietary software and electronic intellectual property; foreign exchange transactions must be transparent; new food safety standards are in place; a variety of provisions increase access of US agricultural products to Mexican and Canadian markets; and higher thresholds are set for American content if a car is to avoid tariffs. There is more, but you get the idea: potential trading partners now have a guide to a successfully concluded negotiation.
I would add another page to that guide. Don’t generalise from the fact that this agreement was finalised despite Trump’s dislike of Canadian Prime Minister Justin Trudeau. This agreement was Trump’s baby, born of a campaign promise. He could not abort the negotiations. But when it comes to future negotiations it is better to be Boris, liked by Trump, than to be Macron, who has serially insulted the American President in pursuit of applause from a domestic audience violently opposed to many of his policies.
On the same day as the Democrats in congress finally agreed to approve USMCA, Trump announced what he characterises as another win, a Phase One trade agreement with Xi Jinping. Or almost an agreement. Or perhaps an agreement. Or maybe an agreement. Once again, details to follow, with Washington’s certainty of a signing in January matched by China’s reluctance to support that certainty.
Trump took some planned new tariffs off the calendar, and, abandoning his never-ever position, halved a few others. The Chinese are said by various Trump officials to have agreed to buy $40bn, or $50bn, or even $100bn annually of American products. Crucially, China did not agree to any changes in its basic trade model, the supposed target of Trump’s tariffs.
Both sides are claiming a win, but to these eyes it looks like Trump has earned the title he most detests, Loser. The hard-liners around Xi Jinping have a more plausible case for their victory claim. When Trump insisted that China quantify its purchase commitments, and refused any tariff cuts, they told Xi to hang tough. He did, Trump didn’t.
Trump did, however, gain two advantages. One was to claim twin triumphs on the trade front just as the House committee was announcing its articles of impeachment. The other, more important, was a calming effect on the business community. Not that the deal, if there is one, significantly changed the array of forces on the trade battlefield. But it created a sense that “peak tariff” has been reached, at least vis-à-vis China, that the next tweet will not create still more uncertainty. And with the deal comes predictions that reduced uncertainty will encourage businesses to end their disinclination to invest in plant and equipment. Just in time for the November elections.
But calm is not the milieu in which this President thrives. French President Emmanuel Macron’s decision to levy a digital tax on major internet companies — of which France not surprisingly has none and America has most, outraged Trump. In the 17th century, Louis XIV’s finance minister, Jean-Baptiste Colbert famously said that the art of taxation consists in so plucking the goose as to procure the largest quantity of feathers with the least possible hissing. If Macron was counting on the Trump Goose to repress its hissing, he was misreading this President. Perhaps 100% duties on French cheeses, Champagne, hand bags, and other luxury goods, Trump mused (out loud, as is his musing style), would show Macron not to mess with companies that will be taxed when and how Trump decides they will be taxed, with all cheques remitted to the US Treasury, not France’s Trésor Public. Oh yes, and there are those European Union automobiles that enter the US virtually tax free, while made-in-America vehicles pay 25% duties when imported into the EU.
Peace in his time is not a goal of Donald Trump. Not when the self-styled Tariff Man can levy duties on the products of countries that are far away and about which he knows very little.
Don’t let the partisan food fight over impeachment lead you to believe that the American government cannot function. Warring politicians of both parties agreed last week to raise spending this year by $50bn, the deficit be damned. That’s bipartisanship for you.