With the 2016 election in the rearview mirror, manufacturers must be mindful of the early initiatives you can expect from Congress and the new administration. With a return to one-party rule, the coming congressional term is likely to be among the most active in recent memory.
President-elect Trump’s appointment of Republican National Committee Chairman Reince Priebus as White House chief of staff signals that, rather than battling the Washington establishment, Trump has now embraced it to get results. Similarly, the decision to replace New Jersey Governor Chris Christie with Vice President-elect Mike Pence as transition team lead means the president-elect understands that, campaign rhetoric aside, his early success will depend on partnering with House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell.
The Trump transition team was thinly staffed and produced few of the reams of position papers the Clinton team, and even the Romney team in 2012, produced leading up to Election Day. As a result, we believe the core of the term’s early legislation will be a series of bills previously passed, largely by the House, which President Obama refused to consider. The last four years’ deep legislative history offers insight into the likely legislative agenda, for example, the upcoming tax bill or financial services reform.
In the short run, we expect the first weeks of the Trump Administration will focus on quick action to nullify many of the Obama Administration’s executive orders. Priorities likely include approving the Keystone XL pipeline, reversing Clean Air Act rules, striking down the increased minimum wage for federal contractors, and freezing the recruiting of new, non-defense federal employees. Trump also spoke during the campaign about lifting restrictions on U.S. energy development and canceling billions in payments to U.N. climate programs.
On trade, expect the president-elect to order his new commerce secretary to “identify all foreign trading abuses that unfairly impact American workers and direct them to use every tool under American and international law to end those abuses immediately.” Also expect Canada, Mexico, and the United States to begin negotiations to revamp the North American Free Trade Agreement.
We anticipate that Republican leadership to combine a number of priorities into a major reconciliation bill, which will only require 51 Senate votes. (Other Senate bills require 60 votes to advance under current rules.) Key elements in this whopper of a bill will likely be tax reform, the repeal or rewrite of the Affordable Care Act, and financial services reform. Such reform will assuredly eviscerate the Consumer Financial Protection Bureau (“CFPB”), in addition to addressing a number of other issues.
Aside from fleshing out the Cabinet, President Trump will nominate a Supreme Court justice and two members of the Federal Reserve’s seven-member Board of Governors. It is worth noting that the Fed now has jurisdiction over the CFPB. Another interesting decision is whether to fill the open seats on the Export-Import Bank. Three of its five seats are open. While Congress has fought off challenges to kill the bank, Trump could effectively kill it by never filling the vacant seats.
In the next six months, the new administration and Congress will negotiate some of the largest changes to law in recent memory, substantially impacting manufacturers.