Goldman sees Trump tariff hikes after midterm vote

Voters went to the polls on Tuesday, November 3, and trade analysts say a Democratic win in Congress would bring more scrutiny of President Donald Trump's tariffs but probably would not remove them. Democrats could hold oversight hearings and stage symbolic repeal votes, but Trump's veto and his executive trade powers would likely keep his tariff agenda in place, Reuters reported. Goldman Sachs economists expect tariffs to go up after the vote.finance-commerce.com

Hearings, not repeal

Democrats need a net gain of four seats in each chamber to overturn Republican majorities of 218-214 in the House and 53-47 in the Senate. Even with a win, they would be far short of the two-thirds majority needed to override a veto, according to Reuters. If they take at least one chamber, they could bring up Senator Chuck Schumer's "End Trump's Tariff Tax Act." The bill would repeal Section 338 of the Tariff Act of 1930, which backs the tariffs on Canadian goods, and Section 122 of the Trade Act of 1974, which was used for Trump's temporary 10% global tariffs. It would also refund the duties already collected.finance-commerce.com

"Democrats are going to try a lot of things. I just don't think anything's going to get across the finish line," said William Reinsch of the Center for Strategic and International Studies. Control of committees would still let Democrats look into how tariff exemptions are granted and how investment funds pledged by Japan and South Korea are being handed out, Reuters reported. Senator Ron Wyden said repealing the Canada tariffs would be "one of the most obvious priorities."finance-commerce.com

Speaking at a Fortune summit in Vietnam on Tuesday, former US ambassador Ted Osius said tariff power "rests with the executive." He added that "it's actually harder to unwind tariffs once you put them in place," Fortune reported.fortune.com

More tariffs expected

In a note to clients on Tuesday morning, Goldman economists Alec Phillips and Abhay Duggirala said Democratic reversals would probably focus on "a few countries (e.g., Canada) or products." They wrote: "We expect President Trump to announce new tariff increases after the election that would more than offset those reductions," lifting the effective US tariff rate by "a little under 2pp," according to Fortune.fortune.com

The White House has been planning to govern through executive action if Democrats win, Reuters reported. Options under review include new tariffs on critical minerals and wind turbines. An upcoming investigation into excess industrial capacity in 16 trading partners could also lead to more duties. The Supreme Court struck down Trump's emergency tariffs in February, and the administration has since relied on other legal bases for its tariffs, Fortune noted.reuters.com+1

No relief for trading partners

Analysts in Asia say exporters should not count on a hostile Congress to undo the tariffs, the South China Morning Post reported. Biswajit Dhar of the Council for Social Development in New Delhi said a defeat could make Trump "even more aggressive because he will have a point to prove."amp.scmp.com

White House spokesman Matthew Middleton said in a statement that "President Trump will never waver from putting America First, whether in trade negotiations or through an economic agenda of tax cuts and deregulation".finance-commerce.com