International Trade and Finance: Overview and Issues for the 116th Congress

Summary

The U.S. Constitution grants authority to Congress to lay and collect duties and regulate foreign commerce. Congress exercises this authority in numerous ways, including through oversight of trade policy and consideration of legislation to implement trade agreements and authorize trade programs. Policy issues cover areas such as U.S. trade negotiations, U.S. trade and economic relations with specific regions and countries, international institutions focused on trade, tariff and nontariff barriers, worker dislocation due to trade liberalization, enforcement of trade laws and trade agreement commitments, import and export policies, international investment, economic sanctions, and other trade-related functions of the federal government. Congress also has authority over U.S. financial commitments to international financial institutions and oversight responsibilities for trade- and finance-related agencies of the U.S. government.

Issues in the 116th Congress

During his first two years in office, President Trump has focused on reevaluating many U.S. international trade and economic policies and relationships. The President’s focus on these issues could continue over the next two years. Broad policy debates during the 116th Congress may include the impact of trade and trade agreements on the U.S. economy, including U.S. jobs; the causes and consequences of the U.S. trade deficit; the implications of technological developments for U.S. trade policy; and the intersection of economics and national security. Among many others, the potentially more prominent issues in this area that the 116th Congress may consider are

the use and impact of unilateral tariffs imposed by the Trump Administration under various U.S. trade laws, as well as potential legislation that alters the authority granted by Congress to the President to do so;

legislation to implement the proposed United States-Mexico-Canada Trade Agreement (USMCA), which would revise and modernize the North American Free Trade Agreement (NAFTA);

the Administration’s launch of bilateral trade negotiations with the European Union, Japan, and the United Kingdom, as well as key provisions in trade agreements, including on intellectual property rights, labor, the environment, and dispute settlement;

U.S. engagement with the World Trade Organization (WTO), proposals for WTO reform, and the future direction of the multilateral trading system;

U.S.-China trade relations, including investment issues, intellectual property rights protection, forced technology transfer, currency issues, and market access liberalization;

the future of U.S.-Asia trade and economic relations, given President Trump’s withdrawal of the United States from the proposed Trans-Pacific Partnership (TPP) and China’s expanding Belt and Road Initiative;

the Administration’s use of quotas to achieve some of its trade objectives, and whether these actions represent a shift in U.S. policy towards “managed trade”;

monitoring the implementation of legislation passed by the 115th Congress, including changes to the Committee on Foreign Investment in the United States (CIFUS) and export controls, as well as the creation of a new U.S. International Development Finance Corporation;

re-authorization of the Export-Import Bank, the U.S. export credit agency that helps finance U.S. exports;

oversight of international trade and finance policies to support foreign policy goals, including sanctions on Iran, North Korea, Russia, and other countries;

shifts in U.S. leadership of international economic policy coordination at the Group of 7 (G-7) and the Group of 20 (G-20) under the Trump Administration;

legislation to fund the Administration’s commitment to increase U.S. contributions to the World Bank, as well as potential U.S.-led reforms to the institution; and

major developments in financial markets, including the impact of other countries’ exchange rate polices on the U.S. economy, high levels of debt in emerging markets, potential economic crises, and the role of the U.S. dollar in the global economy.