Trump's midterm drubbing could give trade partners room to resist
SPY•Democrats captured majorities in both chambers of Congress in a rebuke to President Donald Trump, potentially giving trade partners room to resist his policies. Japan and South Korea have pledged $550 billion and $350 billion in U.S. investments, respectively, while China’s trade truce with the United States expires in January.
1. Allies may slow pledges
The election result could prompt U.S. allies in Asia to slow investment commitments made to placate Trump. Japan pledged $550 billion and South Korea $350 billion, but analysts said the countries may feel less pressure to fulfill those commitments while remaining wary that tariff disputes could resurface.
2. Trade tensions persist
European trade tensions have eased through a series of deals, but potential disputes remain over digital services taxes and a €3 billion public loan to Airbus. India, which is still negotiating a trade deal with the United States, may take a wait-and-see approach; its trade minister said the first phase of a deal was in the final stages of drafting, while stressing that New Delhi would proceed only if it secured an advantage over competing exporters.
3. China talks face limits
China may try to use Trump’s weakened political position to strengthen its hand in talks, but a Democratic-controlled Congress could constrain his ability to offer concessions. China’s trade truce with the United States expires in January, and analysts said Democrats are likely to oppose giving Trump free rein on deals with Beijing and may support tighter technology export controls.
