Trudeau and Pelosi Talk Trade Deal
Author: Greg Valliere
September 4, 2019
EVERYONE, IT SEEMS, WANTS A DEAL to replace NAFTA with the USMCA — especially Justin Trudeau, who could ride this issue to a second term in Ottawa.
SO TRUDEAU AND NANCY PELOSI, whose Democrats mostly want a deal, talked by phone yesterday about where things stand. Our guess is that ratification is still several more weeks away — perhaps just in time for the Canadian election in late October. Trudeau, it can be safely assumed, will claim some credit if the treaty is signed.
THERE ARE STILL ISSUES, including the establishment of an enforcement mechanism, tough labor standards, environmental provisions, etc. And there are protectionist Democrats like Senate Minority Leader Chuck Schumer, who don’t want to give Donald Trump any victories, period.
BUT OUR SENSE IS THAT THE VOTES ARE SUFFICIENT to pass the deal in both houses; Republicans overwhelmingly favor the new pact, as do U.S. businesses and a surprisingly large number of Democrats. Tom Donohue, president of the U.S. Chamber of Commerce, said yesterday that there are enough votes in both houses to pass the treaty, and we agree.
FOR PELOSI, IT’S ALL A MATTER of what she can get in return — probably some deals as appropriations bills are marked up this fall. Despite her contempt for Trump, Pelosi will deal when necessary, as she showed this summer when she led the effort to hike the debt ceiling (her price was a huge increase in domestic spending).
THE OUTLOOK IS NOT AS BULLISH for trade talks with China, as Trump is now backed into a corner — the U.S. manufacturing sector is slumping but he won’t relent in this increasingly bitter trade war. Neither side is likely to blink any time soon, and huge differences persist on several issues, which makes passing the USMCA even more important.
PASSAGE OF THE USMCA and perhaps some deal-making on Brexit might persuade markets that a degree of sanity is returning to global trade. Boris Johnson has overplayed a weak hand, and a ruinous economic meltdown in the U.K. now seems less likely. That’s a positive development for Europe, just as progress on the USMCA is a positive development for North America.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), Highstreet Asset Management Inc. (Highstreet), AGF Investments America Inc. (AGFA), AGF Asset Management (Asia) Limited (AGF AM Asia) and AGF International Advisors Company Limited (AGFIA). AGFA is a registered advisor in the U.S. AGFI and Highstreet are registered as portfolio managers across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. AGF AM Asia is registered as a portfolio manager in Singapore. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
© 2019 AGF Management Limited. All rights reserved.
