Prime Minister Trudeau and Mr. Trump spoke recently to discuss the USMCA (new NAFTA) as well as the aluminum and steel tariffs with sources seeing little, if any, progress. Canada is making it more and more clear that the USMCA is dependent upon the removal of those tariffs as is Mexico.
For lobster lovers, Canada is doing a brisk trade with China in their run up to Chinese New Year. US exports of lobster to China were down 95% in January of this year. More US caught live lobster was sent to Canada to be shipped onwards to China as Canadian product, and apparently, the lobster counts love Canada is conducting an investigation.
Continuing to look North, Prime Minister Trudeau is facing an ethical crisis months before national elections. Does this event negatively impact his re-election chances? Do Americans care?
In related news, Congress is preparing to vote within the next month on the USMCA. Democrats are signaling that they want some substantial changes to the deal. Mr. Trump’s threat to tear up NAFTA could be triggered by a no-vote in Congress, or further delays in the vote. Then, of course, we come back to the question of “can Mr. Trump do this on his own” or does he need a vote by Congress to end NAFTA. If he does need a vote in Congress, then this could become very interesting bit of political football. Democrats and some Republicans vote against the USMCA, and then vote in favor of overturning Mr. Trump’s decision to terminate NAFTA. And then?
The US budget gap widened in the first four months of the fiscal year (Oct. 1) as tax collections fell and spending rose at the federal level. The gap widened by 77%. Republicans predicted robust tax revenue increases from lowering taxes on the wealthy. Maybe their economist produced fake news.
Continuing on the budget gap theme, you may have forgotten as you increase the gap, you increase the deficit and ultimately, the debt. The great Republican deficit/debt hawks are keeping their beaks closed tight.
Senate Republicans decide not to investigate hush money payments to women over POTUS’s affairs even though crimes have likely been committed. They are hoping that bad guy Mueller does it for them.
Now a real surprise, North Korea is reported to be rebuilding a missile launch site it previously claimed to be dismantling. A further blow to Kim Jong Un and Mr. Trump’s noble aspirations.
After the abrupt termination of the summit in Hanoi between Mr. Trump and Mr. Kim Jong Un, the US State Department announced, in a full media briefing, that North Korea’s interpretation of the flow of events was correct and the President, was not. This is stunning at many levels, but it again shows Mr. Trump’s inability to convey information accurately. I wonder who loses their job at State now?
Remember Mr. Trump said “trade wars are easy to win.” USMCA is in danger of failing, and the Chinese negotiations are not moving rapidly to a conclusion. On the economic front, our trade gap with China widened in 2018 from $375 Billion to $419 Billion. Those tariffs are doing a number on China, aren’t they?
The Chairman for the House Judiciary Committee, Representative Nadler, has announced sweeping Subpoenas to the White House, the Trump organization and others seeking amongst other information, Mr. Trump’s tax return and other financial data. Mr. Trump in a speech to CPAC belittled House Democrats as crazy. POTUS obviously was ignoring Mr. Cohen’s testimony (which I suspect could be collaborated by Mr. Mueller in many respects, but he is waiting to deliver that information in a more appropriate venue).
For all you exporters who are listening. On Monday, March 4, 2019, the Treasury announced rules for US companies to claim a 37.5% deduction on intangible income from foreign sales (exports). This is a potential boon nestled in the 2017 tax act. Of course, this may be reduced by retaliatory tariffs imposed upon those same sales.
Mr. Owens is a former member of Congress representing the New York 21st, a partner in Stafford Owens in Plattsburgh, NY and a Senior Advisor to Dentons to Washington, DC.
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