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26.09.19 15 FOREIGN NEWS INVESTORS shouldn't worry about what a formal impeachment inquiry into President Donald Trump could mean for his current term or even his re-election chances, Wall Street invest- ment banks advised clients this week. But what they really should be wor- ried about, Washington policy analysts said, is what the impeachment inquiry means for a potential trade deal with China and an already agreed-upon deal with Canada and Mexico. Also inves- tors can forget about any new legis- lation like a drug prescription policy, they said. A host of brokerages rushed to assure clients on Tuesday and Wednesday that while it's unlikely the Republican Senate ever convicts the president, House Speaker Nancy Pelosi's deci- sion to move forward with the inquiry could mire a number of Trump's key trade initiatives, including the passage of the USMCA and talks with Beijing. Pelosi on Tuesday announced a for- mal impeachment inquiry into Pres- ident Donald Trump as a growing number of Democrats concerned over the president's alleged abuses of power overwhelmed the Speaker's initial re- luctance. e most recent Democratic outcry comes amid accusations that the president tried to coerce Ukraine's president to investigate the family of former Vice President and 2020 pres- idential hopeful Joe Biden. Trump released on Wednesday a rough transcript of his call with Ukra- nian President Volodymyr Zelensky and stocks showed little reaction. USMCA: 'Legislating is dead' e investigation endangers the ratifica- tion of the landmark United States-Mex- ico-Canada Agreement— the rehashed trade agreement between the U.S., Mex- ico and Canada. "Legislating is dead. As we previously said, impeachment will lead to Congress doing nothing except that which it must do by established deadlines (like fund- ing the government)," wrote Raymond James policy analysts Ed Mills and Chris Meekins. "e idea of bipartisan action on drug pricing, infrastructure, and potential- ly the passage of the USMCA (the new NAFTA) are dead until after the 2020 election," Mills and Meekins continued." e U.S. sent about $300 billion in goods to Canada last year, more than any other country. It exported about $265 billion in products to Mexico, its second-largest market. But the new impeachment inquiry, at the very least, complicates that timeline, according to Dan Clifton of Strategas Re- search Partners. "In the short run, it means it's unlikely that NAFTA's going to get through," Clift- on said Wednesday on CNBC, referring to the USMCA. "If you remember last week, Nancy Pelosi went on Jim Cramer's show, saying that she wanted to get the 'yes' on NAFTA. at's probably going to move away." e legislation, shortened to USMCA and pitched as a replacement to NAFTA, is one of the administration major eco- nomic achievements to date. e accord makes changes to the trade relationships between the U.S. and two of its largest trading partners, including stricter rules on the country of origin for auto parts and better enforcement of wage rules. One of Trump's top trade advisors, Peter Navarro, told CNBC earlier this month that the deal is so important that he was 100% sure that Congress would ratify the agreement by the end of 2019. at seemed even more likely as recently as last week, when Pelosi told CNBC's Jim Cramer that Democrats "hope that we're on a path to yes" on OKing the USMCA. Sino showdown Wall Street also turned its attention to the odds of a U.S-China trade deal in light of the new impeachment debate. e entrenched trade war between the Washington and Beijing remains one of the market's major headwinds both due to the imposition of billions of dollars' worth of tariffs on the other's goods as well as the uncertainty felt by CEOs trying to protect supply chains and other infra- structure. Despite persistent calls from Wall Street to settle for partial concessions, the White House has thus far toed the line on de- mands for a comprehensive agreement, complete with remedies for alleged intel- lectual property theft. "From a China trade perspective, the de- bate will be about a Trump pivot towards a win via a 'mini deal' or doubling down to cater to his base," Raymond James ana- lysts Meekins and Mills wrote. ough the two nations appeared to be close to a deal in the spring, negotiations broke down after China reneged on cer- tain promises, according to U.S. trade of- ficials. As the dispute intensified, the U.S. placed Chinese telecommunications gi- ant Huawei on a blacklist that, in practice, barred the company from purchasing parts from American suppliers. Gutsy gambit? But in terms of how the impeachment inquiry will affect Trump's tenure in the White House, or even of reelection, re- main a matter of debate. Some, including Strategas's Clifton and Keefe, Bruyette & Woods Washington re- searcher Brian Gardner, argue that open- ing an impeachment query poses a signif- icant risk not to Trump, but to Democrats up for election in 2020. When "the Republicans chose to im- peach Bill Clinton, they were headed for a 40-seat win in that midterm election and the Democrats ended up winning five seats," Clifton recalled. "So impeachment actually hurt the Republicans 20 years ago and that's the risk the Democrats are tak- ing by entering this fight." For his part, Gardner described Trump uncanny ability to leverage political dra- ma and noted that the recent news likely hurts Biden's odds of securing the Demo- cratic nomination. "Mr. Trump has a unique ability to ma- nipulate these kinds of situations to his advantage and if the House moves to im- peach him we think it could backfire on Democrats and help Mr. Trump's reelec- tion prospects. Democrats could easily overplay their hand and create a backlash that will unite Republicans," Gardner wrote. Wall Street believes Trump is safe, but worry impeachment inquiry could hinder trade deals

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