Is Trump Really Making America Great Again? The USA Vs. China Story So Far
Later this year, in early November the US conduct their midterm elections. These elections take place halfway through the presidential term and is a perfect opportunity to let voters judge the performance of the current administration. Given that president Trump has embarked on a series of controversial policies comprised of trade tariffs on imports from nations he feels are taking advantage of the current system as well as offering tax cuts during a time when the budget deficit is as high as it is.
Trump's policy agenda has been relatively easy given that his Republican party have control of both chambers of Congress - the Senate and the House of Representatives. 35 out of a 100 seats in the Senate are up for contest, whilst all the seats in the House are due up, so given the majority in the Senate, it seems very unlikely that Trump's party will lose control in the former. The Democrats (the opposition) however, have a much better chance of testing their majority in the House and this is where the risk lies ahead.
Should the Democrats win a majority within the House of Representatives, then Trump's agenda will run into stronger opposition and he may find it tough to pass legislation on policies he feels necessary to 'Make America Great Again'. US politics are united on that front as is every government of its day, but the way in which the president has gone about his business has drawn criticism, with Americans divided on how this presents the US in the global trading arena.
While a tough stance on China, the rest of the major trading nations has support within his core voters, business and the 'man on the street' could feel the effect of his trade policy which has already drawn retaliation from the Chinese on US goods coming into the country. Local businesses are also feeling the heat, with names such as Harley Davidson - a US stalwart - opting to move some of its operations abroad in order to avoid the effects of the tariffs imposed on their goods made in the US.
This is somewhat at odds with Trump's plans to bring jobs back to the US, so as one can see, his tough policies have drawbacks and this will be at the heart of their votes. The president will also come under scrutiny himself as this is effectively also a vote of confidence in him as a president and he is no stranger to controversy as we have seen over the last few years. This is a critical time for the president, and given some of the implications this has on the Dollar, it is no surprise that speculators have started to trim some of the longs which have dominated this market in recent months, based on economic strength and higher interest rates and yield.
Let's wait and see how the election unfolds and how this impacts trade negotiations with the powerhouse China....