Trump and Congress: A drawback can easily become a plus.

US Congress in Washington finally delivered their first major decision: For the time being, Obamacare is safe, and we will not see any new healthcare reforms soon.
This outcome is a major drawback for the new administration. Nonetheless, from a strategic perspective, this loss could (easily) become an asset to Trump for three major reasons:
A. This battle regarding Obamacare allowed the new administration to count (and to observe) his majority in Congress. Trump’s team wanted (and needed) to know his Republican troops better; they wanted to separate those who will follow the new president from those full of doubts. These objectives were fully achieved.
B. The main reason for fighting Obamacare for President Trump was gone once he was elected: His fight was to ensure a high tea party vote on Election Day. In his view, reshaping or even fully eliminating Obamacare was never a primary goal; it has always been a secondary one. The main political goal of Trumps’ agenda is to implement an unprecedented US fiscal reform to reinvigorate (and, to some extent, reindustrialise) the American economy. Now, it is fair to say that by eliminating the Obamacare the government would recover several billions which would then give some room to finance other ideas and programs. To be honest, I really believe Trump does not care too much about this money: increasing  the government debt, in his view, it is not such a big issue. What matters is to change the fiscal structure and the way in which globalization is done. Besides, given that he is convinced to reestablish a growth rate of 4% the debt problem might be solved thanks to the economy itself!!
C. Now, it was no surprise that simultaneous to the announcement of its important defeat, the administration proclaimed its decision to rapidly submit a tax reform concerning firms and international trades to Congress.
This reform is a twofold package: On the one hand, a first set of measures will mainly reduce taxes for American firms; on the other hand, a more unorthodox set of measures is aimed at taxing imports and favouring US exports.
The tax cut concerning firms’ profits and income taxes will be easily obtained by the administration. From President Regan onward, Republicans have always been in favour of this sort of manoeuvre to increase economic activity. On the contrary, the second part of the project is trickier and more controversial for any traditional (pro trade) Republican deputy. Therefore, the administration needed to put some pressure on the Republican members of Congress. Now, Trump’s team can count on more solid Congress loyalty. Several Republican members cannot deny holding up Trump’s measures after their failure to support a quick Obamacare reform. The Republican majority needs to quickly approve measures which will clearly help implement Trump’s promises.

These three elements favour Trump in his struggle to impose some sort of protectionist trading measures.
However, the outcome remains uncertain, and it will heavily depend on the following: a) the lists of protectionist measures, mainly import taxes and/or export subsidies; and b) the expected reactions from all other players involved in the global economy game (i.e. other countries).
On that note, the administration should never forget that these countries are key markets for several major US corporations (for instance, the Silicon Valley giants). The risk of huge reputation damage for those firms and an endless commercial war needs to be carefully considered by both Trump’s government and Congress.

Will Congress be ready to follow Trump along this dangerous path?

Despite the pressure put on Congress after the Obamacare case, the administration does not have a clear, positive answer.

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