Impeachment proceedings against President Trump won’t affect corporate earnings, or stock and bond prices, directly. But the political war in Washington changes the outlook for some key policy issues that investors should pay close attention to.

Democrats and Republicans don’t cooperate very much these days, but the House’s effort to impeach Trump will raise the usual standoff to cold war levels. “The latest impeachment imbroglio is a negative catalyst for markets,” Beacon Research advised clients on Sept. 25. “While political gridlock is often good for markets by reducing the risk of government interference, dysfunctional paralysis of government is not because it increases uncertainty over the government’s ability to handle a crisis.”

Trump’s trade deal with Canada and Mexico—the USMCA—could be the first casualty of impeachment. Trump finalized a deal last year to replace the old North American Free Trade Agreement, but Congress must ratify it before it goes into effect. And that now seems unlikely. “Bipartisan action on … the passage of the USMCA (the new NAFTA) is dead until after the 2020 election,” writes Ed Mills of Raymond James.

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