Why the Democrats taking back the House may not be good news

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Millions of Americans have cast their votes in one of the most pivotal and crucial midterm elections the country has seen in generation. And just when you thought politics south of the border couldn't get any more turbulent -- it has. In what many viewed as a referendum on President Donald Trump’s divisive administration, be prepared for even more hyper-partisanship and gridlock as the Democrats have taken back control of the House of Representatives, while the Republicans have hung on to the Senate. While those in this country who don’t care for Trump and his policies may be cheering the Grand Old Party’s weakened position on Capitol Hill as a win for Canada, that may not be the case, and here’s why.

For starters, the recently signed NAFTA 2.0 deal, officially known as the United States Mexico Canada Agreement (USMCA), has yet to be ratified, and with the Democrats armed with a majority in the House, don’t expect swift passage anytime soon. In fact, it could die a slow death after 13-plus months of tense negotiations. Given how nasty these midterm campaigns have been, the newly empowered Democrats will no doubt be digging in for a long fight, and that could be bad news for Canada which, like Mexico, would like to see this new trilateral trade agreement fully ratified. Unfortunately for America’s neighbours, don’t expect House Democrats to be eager to work with their counterparts across the aisle in ratifying USMCA anytime soon. After all, there are no longer any centrist politicians in America, and the word “compromise” itself has become blasphemous to lawmakers.  

On the flip side, should the USMCA fail to be ratified, the Democratic-led House will prevent Washington from unilaterally leaving the current NAFTA deal, which is still in place today. Under U.S. law, the executive branch does not have final say in trade deals. Congress does, so any threats by Trump to scrap the decades-old deal can simply be labeled as bluster as the U.S. Constitution holds more sway than his Twitter account. While it was never expected that the Republicans would allow Trump to pull out, you can guarantee the Democrats will do everything in their power, on just about everything, to get in Trump’s way.

In Canada, it will be interesting to see how the loonie reacts to news of an even more divided America. The dollar has seen its ups and downs thanks to this unpredictable president, but as the Beltway gets even more bogged down in partisan politics, it could cause a bit of pain for the dollar, which was rather flat the day Americans went to the polls. And given the fact that the majority of Canadian oil exports go south of the border, the Democrats may not be so keen on pushing ahead with cross-border pipelines as much as Republicans were. So it’s safe to say that Big Oil on both sides of the border is holding its breath on how left-leaning this new crop of Democrats will be when it comes to energy and environmental issues.

Looking through a communications lens, you can bet Trump will be ratcheting up the rhetoric to new levels, which may or may not be surprising anymore given his penchant for shock-and-awe commentary that have left many of us numb.

We also can’t lose sight of the fact that we are less than a year away from a general election in Canada, so it will be interesting to watch how the Liberals and Conservatives respond to this shift in power. Both parties have been disciplined in their public commentary about the president, and tend to shy away from weighing in on American electoral results. But with Trump losing his Republican-controlled Congress and the USMCA hanging in the balance, that could very well change as all federal parties prepare for next October’s vote.