Top 12 U.S. Issues You Need to Know

Mid-Summer 2018 Edition: Top-line issues you don’t want to miss!

Trade & Investment

The U.S. is engaged in trade disputes with several partners. Tariffs have been implemented on steel and aluminum imports, resulting in retaliatory tariffs from several countries. Tariffs are being implemented against selected Chinese imports, with further under consideration. The Trump administration is investigating tariffs on imports of automobiles and parts, with a decision expected by September. Congress is finalizing legislation to reform the process of conducting national security reviews of deals U.S. and foreign companies (CFIUS). NAFTA negotiations will continue, with the possibility of an agreement by the end of 2018.

Foreign Policy

The United States has withdrawn from the Iran nuclear accord and primary and secondary sanctions will go into effect later this year — impacting global energy markets and foreign companies doing business in Iran. U.S. relations with European allies are strained over disagreements on trade, NATO defense spending, and a unified approach on Russia. U.S.-Russia relations are complicated by the ongoing investigation into Russian interference in the 2016 presidential election. U.S. policy in Asia is focused on constraining China’s growing diplomatic, economic and technology prowess, and advancing a framework for denuclearization of North Korea.

Midterm Elections

Democrats are seeking to capture at least one chamber in the U.S. Congress in the November midterms. In the Senate, Democrats are defending 29 Senate seats, Republicans only nine. Democrats need to win a net of two seats to control the chamber in 2019–2020. In the House, about 80 seats are considered competitive this year. Democrats are currently expected to win the net of 24 seats they need to gain control of the chamber. The Senate may vote to confirm the President’s second Supreme Court nominee before November.

Fiscal Policy | Debt

Congress has passed a full-year budget that increases federal spending for both the military and domestic programs by almost $300 billion over two years, and suspending the government’s debt ceiling limit through March 1, 2019. The additional spending will cause the federal deficit to expand to over $1 trillion in 2019. The fiscal stimulus, combined with tax cuts, is expected to lift the U.S. economy to near 3 percent growth in 2018, but economists warn the long-term impact will be harmful if not moderated.

Defense

Defense spending will increase by an estimated $165 billion over the next two years as a result of the two-year budget agreement. New investments are expected to be made in counter-terrorism operations, space and cyber, nuclear deterrent forces, missile defense, advanced autonomous systems, artificial intelligence, naval vessels, and professional military education.

Energy and Climate

The Trump administration has sought to rollback energy and climate policies and provide federal support to domestic oil, gas and coal industries, and will soon revise fuel standards for vehicles. President Trump has signed executive orders reversing several energy policies, including withdrawal from the Paris Climate Agreement. The U.S. is promoting LNG exports to Asia and Europe and seeking to free up federal lands for energy development. Consumers are facing the highest gasoline prices since 2014 during this summer’s travel season.

Technology

Tech companies are concerned that Washington will begin to regulate more of their business, including greater transparency of political content and user privacy rules on social media platforms. U.S. companies are working to comply with the EU’s General Data Protection Regulation (GDPR). Other issues to watch include cybersecurity policy, tech addiction, and federal guidelines on self-driving vehicles and artificial intelligence (AI). The U.S. government will soon have a broader mandate to review foreign investments in advanced technology sectors, such as 5G telecoms, dual-use technologies, advanced robotics and AI — designed to counter China’s growing technology prowess.

Immigration

Congress has been unable to agree on comprehensive immigration reform. President Trump insists that any immigration package include funds for U.S.-Mexico border security, a reduction in chain migration and an end to sanctuary cities. The administration is working to reunite families it had separated on the southern border. The Supreme Court ruled in favor of the President’s travel ban against seven countries.

Healthcare

Republicans have been unable to repeal and reform of the Affordable Care Act (Obamacare). There is increased pressure on U.S. drug companies to control costs and address a worsening national opioid abuse crisis. The Trump administration recently announced a blueprint to lower prescription drug prices, but did not include a plan for the government to negotiate Medicare drug prices. Some Democrats in Congress are advocating for a Medicaid for All initiative to create a single-payer health insurance system.

Infrastructure

The White House has proposed $1.5 trillion in spending to modernize U.S. infrastructure over 10 years, but Congressional action is not expected until after the midterm elections. The proposal would leverage up to $200 million in federal incentives to encourage states and private sector to invest, while relaxing permitting requirements to enable projects to get underway. While there is bipartisan support in Congress for infrastructure, there is little agreement on how to pay for it.

Federal Reserve Board

The Federal Reserve is expected to raise interest rates two additional times during 2018, depending on U.S. growth, inflation and employment. The new Federal Reserve chair, Jerome Powell, says he will continue the policy of gradual interest rate increases and normalization of monetary policy. The Fed will continue to draw down its $4 trillion balance sheet throughout 2018. President Trump has a unique opportunity to reshape the Federal Reserve for years to come, due to current vacancies on its policy-making board.

Economic Policy, Regulation & Taxes

The economic outlook is favorable for 2018. Growth may reach 3% for the first time since 2005. The Trump administration is urging U.S. and foreign companies to invest in jobs and plants in the United States. There is pressure on companies to use the new tax law to invest in workers and the economy. The administration is reducing environmental, public health and safety regulations on U.S. companies and farmers. Congress passed legislation easing Dodd-Frank regulations on small and medium-sized banks.