The lame-duck dealmaking math has shifted now that the elections are over and Republicans are preparing to take full control of Washington next year.
We’re particularly tracking four financial services, trade and tax areas that have been floated around for potential action before year’s end.
Republicans’ coming trifecta means the GOP can wait to dictate how it wants to handle these issues in 2025. Democrats, who will have little power may be in no mood to cut a deal.
Let’s jump into the lame-duck outlook for these issues and who wins or loses depending on how things go.
Outbound investment overhaul: There’s bipartisan interest in restricting the flow of U.S. capital into sensitive sectors of China’s economy. But Republicans have been butting heads on the best approach for over a year. That could change this month.
Wall Street allies led by Rep. Patrick McHenry (R-N.C.) want to limit any new sanctions regime to focus on specific actors, while the different bills sponsored by Reps. Michael McCaul (R-Texas) and Sen. Bob Casey (D-Pa.) would target broader sectors of the Chinese economy. Ultimately, banks take the lead on a lot of sanctions enforcement, and they’d prefer the system didn’t change in a big way.
De minimis crackdown: House Ways and Means Committee aides have been negotiating for weeks to try to find a deal cracking down on de minimis rules that allow low-value packages to enter the United States without facing as much duties, fees or scrutiny.
Tightening de minimis rules has buy-in on both sides of the aisle. Lawmakers view it as a win to block Chinese companies they believe are abusing the rules and bad actors from getting fentanyl or other illicit goods into the United States.
It would be a loss for China-based online sellers like Shein and Temu and big shipping companies like UPS or FedEx.
Crypto talks: We’re not expecting much activity in digital asset policy before January. Trump campaigned on crypto, and his team wants legislators to wait until he returns to the White House to make big moves. Regulators will also have work to do on crypto policy. Several lawmakers have told us they want to work hand-in-glove with those folks.
All things tax: A widely-backed measure to extend tax treaty-like benefits to Taiwan is in the mix for a ride on the annual defense authorization bill, as we reported. However, it’s still unclear whether lawmakers would let the NDAA carry a tax or trade measure, which would be unusual.
Advocates for disaster tax relief are also pushing to get that done. That’s no slam dunk, especially if any lawmaker tries to add their own tax priority to the mix.
Disaster relief would be big for states like Florida, North Carolina and California, which have been hard hit by hurricanes, wildfires and other natural disasters lately. The Taiwan bill would be a boost for the U.S. ally and also for Taiwanese chipmakers who may want to invest here.
Overall though, there’s little oxygen for a tax deal right now with the GOP already forging ahead to tee up a big measure in the early months of the new Trump administration.
