Divided U.S. Congress following midterm elections on November 5 could delay USMCA's ratification

The 2018 U.S. midterm elections were held on November 6. All 435 seats in the House of Representatives and 35 of the 100 seats in the Senate were renewed. While Republicans consolidated their majority in the Senate by a narrow margin, securing 51 seats against 46, Democrats obtained a majority in the House of Representatives, securing 231 seats against 204. The 116th Congress is slated to be inaugurated on January 3, 2019.

Changes in the Congress’ distribution could potentially have a considerable impact in trade policy through 2019, especially if Democrats use their influence in the lower house to oppose President Donald Trump’s policies. In particular, a divided Congress will have to ratify the U.S.- Mexico - Canada Agreement (USMCA), which is expected to replace the 1994 North American Free Trade Agreement (NAFTA). President Trump and his counterparts are expected to sign the new agreement during the G20 Summit in Buenos Aires, between November 30-December 1. While Congress is still liable to adopt the USMCA, Democrats controlling the House of Representatives are likely to seek additional concessions from the Trump administration in exchange for supporting USMCA, including labor provisions and environmental regulations. Moreover, difficulties in gathering sufficient votes for implementing legislation will likely delay the voting process for the USMCA. In this sense, notwithstanding possible controversy, the president could attempt to withdraw the U.S. from the existing NAFTA agreement to force Congress to adopt a resolution on the new trade treaty promptly.