In his biggest political test yet, President Donald Trump failed to convince conservatives within his own party to back a proposed repeal of Obamacare, setting the stage for a potential clash on key issues ranging from trade to regulation. The failed healthcare bill also triggered the biggest drop of the year for U.S. stocks, a sign the Trump trade was beginning to lose its appeal.
Although Republicans control both houses of Congress, it was a faction within their own ranks that effectively stopped the new healthcare legislation from moving to the Senate. The Freedom Caucus, which consists of 33 ultra-conservative and libertarian GOP members, stymied the new legislation because it didn’t go far enough to repeal Obamacare.
Passed in 2010, the Affordable Care Act was one of the defining legislations of the Obama era, but one that divided lawmakers. President Trump vowed to replace the bill immediately after taking office.
Experts say the latest blunder was about more than just healthcare. It represented a proxy for Trump’s political clout, and for his ability to craft deals as head of state. As a result, his approval rating plunged to just 38%, according to a recent Gallup poll.
The president signaled on Sunday that his planned repeal of Obamacare was not dead. “Talks on Repealing and Replacing Obamacare are, and have been, going on, and will continue until such time as a deal is hopefully struck,” Trump said on Twitter.
Trump’s Twitter tirade came after weeks of silence on the healthcare agenda. While some Republicans have said that they would like to revive the healthcare bill, lawmakers for now want to address other policy objectives.
Although investors remain hopeful that Trump will still be able to advance his pro-growth agenda in the coming months, they are more skeptical about his ability to do so. Trump has promised to reform taxes, loosen regulation and boost infrastructure spending by $1 trillion. No details about these policies have emerged.
U.S. stocks returned more than 5% in the first quarter, but gains slowed to a crawl in March as investors awaited the announcement of key reforms. They may have to wait a while longer as the GOP works to introduce new tax legislation.
The U.S. economy expanded just 2.1% in the fourth quarter, with recent data showing a further slowdown is likely at the start of 2017. The economy’s slow-growth conundrum could present an opportunity for the Republicans promote their pro-growth agenda.
 Dan Mangan (March 21, 2017). “Freedom Caucus threatens formal opposition to Obamacare replacement bill barring dramatic changes by Wednesday night.” CNBC.
 William Steakin (April 2, 2017). “Poll: Trump’s job approval rating again sinks below 40 percent.” AOL News.