The House held closed committee hearings featuring various administration witnesses this week and will hold more over the next few weeks. These hearings are designed to add muscle to the impeachment case that Democrats plan to finalize soon. Absent any major development, President Trump is on the verge of being impeached, probably sometime next month before Thanksgiving or in early December.
Last week, President Trump announced "phase one" of a trade deal with China with both US and Chinese trade negotiators participating in the announcement. This agreement is really an outline of a half-dozen or so issues on which the two sides generally have agreed.
Over the next month, the two sides will flesh out the details of these areas of agreement, a process that hopefully will result in a more official announcement by Chinese President Xi and President Trump when they both are in Chile for meetings on November 16-17.
This wordsmithing process inevitably will lead to squabbling that the media will characterize as a threat to the tentative agreement. There will be speedbumps as one or both sides jockey to add new provisions to the agreement. Nonetheless, we expect an agreement to emerge when the two leaders meet next month.
Both sides need the mini-deal to take some pressure off their economies and certain constituencies, but this deal – which sidesteps most of the serious issues dividing the countries – actually lessens the likelihood of a more comprehensive deal. We don't expect a bigger deal to materialize before the US elections in November of next year. Indeed, a phase one agreement may be all that is ever completed.
China Investment Restrictions.
As Congress was out on recess the past two weeks, we received many questions about reports that the Trump administration was considering steps to limit US portfolio investments into China, including the delisting of Chinese companies on US exchanges and limits on government pension funds’ Chinese investments.
The administration has been considering these steps in the context of finding negotiating leverage in the ongoing trade fight. While there are concerns about the failure of Chinese companies to comply with US auditing requirements, there also are concerns from some in the administration about whether delistings are an appropriate response to remedy this issue given their potentially significant negative impact on US capital markets. In addition to potential actions by the administration, there is related legislation in Congress. While that legislation has bipartisan supports, these particular bills have not been vetted and are unlikely to advance.
Sanctions on Turkey.
The tension between the US and Turkey (a NATO ally, which the US is required by treaty to help defend militarily if attacked) has been building for some time and is very serious. Regardless of what happens on the ground in northeastern Syria, the US-Turkey relationship has fundamentally changed for the worse. It's hard to imagine it getting better anytime soon, and this standoff will be a major US foreign policy challenge for many years.