The USA has just conducted its “mid-term” elections which saw all of the seats in the House of Representatives open for re-election and a small number of seats in the Senate. The outcome was that control of the House passed to the Democrats with a majority of 26, but the Republicans tightened their hold on the Senate, increasing their majority to 6. Since a majority in both chambers is required for legislation to pass into law, the outcome means that President Trump will face increased difficulty in passing any controversial measures that cannot gain bi-partisan support.
It is possible that the shift in power in US politics could lead to a de-escalation of the trade war that the US is waging, most notably against China. The policy of confrontation has generated many critics both at home and abroad.
One of the most influential of these critics is Gary Cohn, a former Goldman Sachs executive and one-time economic adviser to the President, helping him to deliver his package of tax reforms. Cohn pointed out that the tariffs that the Trump administration has applied to imports constitutes a purchase tax on American consumers. "We are not a manufacturing economy. So if US citizens can buy products cheaply, they have more money to spend on goods, and once they spend on goods they can take the additional money they have and they can save it - and we do need a higher savings rate in the US. I look at tariffs as a bit of a consumption tax we do not want to tax our consumers when they're going to spend their disposable income on what we produce, which is services." The remarks were made in Singapore in an interview with the BBC.
Cohn said that the President had a strategy regarding trade: "The president has his style, he has his tactics. People have questioned him all the way ... is moving forward on trade, moving forward on protecting US companies, moving forward on protecting US jobs - he understands that's what he ultimately has to do."