US Politics: Is Donald Trump at a crossroads?

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The formal takeover of the House of the Representatives by the Democrats could pose a problem for Donald Trump.

As Nancy Pelosi prepares to take over the House of Representatives, does it mark a turning point for the Trump administration? The Tradefair team brings you the latest from US politics...

“He was used to serving with a Republican Congress, House and Senate that was a rubber stamp to him. That won't be the case.

- Nancy Pelosi, Speaker of the House.

Whether he likes to admit it or not, President Trump is heading for a crossroads. Nancy Pelosi is preparing to take over as the speaker in the House of Representatives, marking the official change in power from the midterms. It is one of the first events to happen as Washington welcomes in its new Congress.

The Commander-in-Chief was relatively upbeat about his party's performance in the elections last November. The Republicans managed to maintain their control over the Senate but lost their influence over the House and Pelosi's move will this week make it formal.

Trump has kept an optimistic outlook about the whole thing, despite the obvious problems it could cause. The day after the midterm results were confirmed, he said it could be the start of a "beautiful bipartisan situation" but others aren't quite as positive, including Pelosi herself.

A "different world" for Trump

Speaking to USA Today, she said that the second half of Trump's presidency would be very different from the first. The future speaker of the House of Representatives explained that it would be a "different world" for the 71-year-old President.

"He was used to serving with a Republican Congress, House and Senate that was a rubber stamp to him. That won't be the case," Pelosi said in an USA Today interview before Christmas. "Oversight of government by the Congress is our responsibility. That's the role that we play."

She is specifically setting her sights on Trump's more controversial policy changes, and won't be ducking out from any fights. Pelosi is planning to challenge Trump on a number of his policies, including funding for his wall on the US border and the resulting stalemate that has left the federal government in shutdown for nearly two weeks.

The President remains committed to his demands for $5 billion to fund his construction of the wall to separate Mexico and the US. However, senior Democrat politicians - like Pelosi herself - are just as firm in their opposition to it.

The ultimate test for Trump

Aside from the wall issue, there are plenty of other issues for the new speaker of the House to get her teeth stuck into when she's sworn in later today (January 3rd). Pelosi has said she will confront the Commander-in-Chief on the investigation into the deaths of immigrant children in US custody and safeguarding Robert Mueller's Russia probe.

This challenge from Pelosi may be the ultimate test for Trump's political acumen. The former TV personality has had a relatively smooth ride, with a Congress that - by default - backed him. Now Pelosi, who was first elected to the House of Representatives in 1987, will present a significant hurdle to Trump's agenda.

Reports suggest that the wheels have already been set in motion to increase the pressure on the President's business dealings before and after he entered the White House.

Although the Democrats have previously been able to publicly criticise Trump's choices in the Oval Office, they've been limited by what they can actually do to prevent him. The induction of Pelosi to lead the House of Representatives will signal the end of that, giving the GOP serious opposition for the first time.

What does it mean for the markets?

More political tug of war may make some investors nervous, and it almost certainly means there will be no further tax reforms that the President had previously promised. However, the Democrat influence could bring more calm, and prevent the trade tensions with China from escalating further.

There's no denying Wall Street is having a rough time of it at the minute, with companies such as Tesla and Apple expecting big losses, but could the change in Congress be exactly what the economy needs to bring stability?

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