The November congressional elections are expected to deliver a legislature that is partially or fully opposed to the White House, increasing the risk of political gridlock in Washington. However, President Trump is likely to continue advancing his agenda through executive orders and remain highly active in trade and foreign policy, potentially increasing the likelihood of international tensions and trade disputes.
Key figures
- 2.1%: forecast US economic growth in 2026 (1.9% in 2027)
- 16: major trading partners targeted by the US investigation into manufacturing overcapacity
- $41.1 trillion: US debt ceiling raised in July 2025
Democrats Favored to Regain Control of the House
With election day fast approaching, Democrats are widely expected to retake the House of Representatives, where all 435 seats are being contested. In the Senate, 35 seats are up for election, making for a much tighter race. While a slim Democratic majority now appears increasingly likely, the final outcome remains uncertain.
Political Gridlock Could Shape the Next Two Years
A shift in congressional control, or even a Democratic takeover of the House alone, would significantly limit Donald Trump’s ability to pass major legislative reforms during the remainder of his presidency. At the same time, Democrats would face limitations of their own, as any legislation would remain subject to a presidential veto unless it secures a two-thirds majority in both chambers, a highly unlikely scenario.
This political stalemate could have direct consequences for the US economy. The debt ceiling, increased to approximately $41.1 trillion in July 2025, is expected to be reached again in 2027, requiring congressional approval for a further increase. Although both parties are likely to avoid a prolonged confrontation, an extended deadlock could result in an unintended technical default. Such an outcome could drive US Treasury yields, already close to 5% on 10-year bonds, even higher and increase borrowing costs for both businesses and consumers.
Trade and Foreign Policy: Trump Maintains Significant Authority
Despite the potential for domestic political deadlock, the Trump administration is unlikely to be sidelined. The White House will continue to hold substantial authority over trade and foreign policy, even if Democrats secure control of both chambers of Congress.
One of the most closely watched issues is tariff policy, where President Trump now exercises extensive powers. A Section 301 investigation currently targets 16 key US trading partners1 accused of maintaining excessive industrial production capacity. While the products and sectors potentially affected have yet to be identified, the investigation could have far-reaching consequences for global trade. Relations with China will also remain under close scrutiny, as the tariff truce agreed in October 2025 is set to expire on 10 January 2027. Ongoing disputes with the European Union over issues such as Ukraine, digital services and Greenland suggest that the EU could become a primary target, particularly after the President threatened a new investigation in response to the EU’s €890 million fine imposed on Google.
The mid-term elections could produce a paradox: constraining Donald Trump on domestic policy without reducing his capacity for international action to the same extent.
The risk is therefore less that of a paralyzed Trump than of a president who focuses his efforts on areas where Congress has the least influence: trade and foreign policy.
explains Marcos Carias, North America economist at Coface.
1 China, the EU, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India.
