The results from the midterm elections have changed the political landscape of the U.S. House of Representatives and Senate. While some individual races remain to be called, the power shift in Congress has been confirmed: Democrats will take control of both the House of Representatives and the Senate. The next Congress, and the way it interacts with the Trump Administration on trade issues, will create new challenges and demand fresh strategies for companies.
We share our initial take on the potential impact of the 2026 US midterm election results on trade issues below.
1. Tariffs
- No Congressional Approval Needed for Continued Tariffs
After the Supreme Court held in Learning Resources v. Trump (February 20, 2026) that the International Emergency Economic Powers Act (“IEEPA”) does not authorize tariffs, the Administration has continued to impose tariffs using a range of authorities: Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132) , then Section 301 of the Trade Act of 1974 (19 U.S.C. § 2411), Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862), and, for the first time, Section 338 of the Tariff Act of 1930 (19 U.S.C. § 1338). None of these authorities requires annual congressional approval. However, the Democratic majority in Congress could seek to pass legislation to undo certain tariffs, although enactment would likely require overriding a presidential veto by two thirds of the Senate. Given the current Democratic make-up of the Senate, a veto override would require support by some Republicans.
- The Courts Remain the Primary Legal Check Over the Next 6–12 Months
The Court of International Trade continues to see challenges to the Administration’s tariff measures. The court heard argument on the forced-labor Section 301 tariffs on September 30, 2026. Section 301 and Section 232 remain the most legally durable tariff authorities.
- The Deal-Based Caps Protect Certain Countries for Now
Many countries and trading blocs have secured non-binding tariff caps in conjunction with ongoing US trade deal negotiations. These tariff rates continue to be in flux, however, and are closely linked to performance of obligations agreed to in the bilateral deals or similar understandings.
- Under Democratic Control, Expect Oversight Rather Than “Repeal”
Oversight hearings on the role of tariffs in raising prices for everyday consumers are a strong possibility. Expect subpoenas and hearings on the IEEPA tariff refund administration and governance of strategic investment MOUs, along with appropriations leverage and pressure to consult more closely with Congress on trade and investment deals. Trade enforcement and tariffs on unfair trade and China measures continue to have bipartisan support.
- Recommended Posture
Continue to plan for persistent elevated tariff levels, preserve rights to later tariff refunds, and assess tariff-risk allocation clauses. Monitor and build the administrative record in the pending Section 301 and 232 proceedings, and prepare to engage new committee leadership in January 2027.
2. Export Controls
The results of the 2026 US midterm election will not fundamentally rewrite the core legal framework for US export controls, because export regulations, tech restrictions, and trade enforcement are primarily driven by executive orders, agency rulemaking (i.e., Bureau of Industry and Security), and bipartisan consensus on China. However, the shift in congressional balance may shape enforcement oversight and policy direction.
- Tougher Tech and China Controls
A Democratic-led Congress will likely push for tighter technology export restrictions, particularly regarding advanced semiconductors and artificial intelligence, alongside broader limits on US investment in China. Similar to when the Senate Permanent Subcommittee on Investigations in 2024 investigated alleged diversion of semiconductors, committees may also seek to leverage oversight powers against technology companies where they believe export controls have been lacking or lax to uncover examples to demonstrate their point.
- Increased Oversight and Hearings
With respect to oversight more broadly, Congress will likely step up committee oversight, investigations, and tighten budget constraints on executive trade and national security agencies, seeking to reassert legislative prerogatives over unilateral executive trade actions. Committees will also likely target private sector entities with investigations to elicit evidence of alleged quid pro quos with the Administration, which could include export-license approvals or easing of controls.
- Greater Predictability with Allies
A shift toward Democratic majorities will likely favor closer supply chain cooperation and alignment with international allies in Europe, Canada, and Mexico.
3. Sanctions
- Russia
The midterm election has triggered an immediate clash between Congress and the White House over the Russia sanctions. Bipartisan lawmakers have heavily condemned the waiver of the recently passed Russia sanctions legislation as capitulation. Because Congress is recessed until the week after Election Day, legislative counteraction is temporarily frozen. The Democratic victory may provide the legislative leverage needed to try to strip the President of his Section 115 waiver authority, forcing the implementation of the strict financial and energy restrictions originally mandated in the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026.
We also expect congressional investigations and subpoenas targeting companies that are involved in importing Russian diesel into the United States under the recent and controversial sanctions authorization approved by President Trump. Democratic members of Congress have already promised as much.
- Iran
Sanctions against Iran are tightly bound to the conflicts in the Middle East. Congress has historically demonstrated limited direct control over managing the active conflict or forcing trade negotiations.
Democrats are expected to use committee oversight and defense appropriations to aggressively rein in executive overreach, push for diplomatic settlements via regional mediators like Egypt, and place guardrails on further escalation that threatens the Strait of Hormuz. Iran’s regime is explicitly betting that midterm political pressure will weaken the US Administration’s resolve, making a long-term sanctions stalemate highly volatile.
- Venezuela
While Venezuela remains a target of the Administration’s broader “America First” geopolitical pressure campaigns, it has been largely sidelined in current midterm debates by the more urgent crises in Eastern Europe and the Middle East. The 2025 National Security Strategy pivotally shifted US focus toward the Western Hemisphere, prioritizing regional economic security, migration control, and homeland defense over systemic global proxy wars. Sanctions against Venezuela will likely be treated transactionally.
US foreign policy and licensing by the Office of Foreign Assets Control (“OFAC”) remain under executive branch authority, and we would not expect a Democratic-led Congress to broadly reverse this year’s relaxation of the sanctions. However, Democratic House committees will likely launch investigations, hold hearings, and issue subpoenas into companies relying on OFAC energy licenses or engaging in deals related to the Administration’s controversial deal with the Venezuelan Government to supply discounted oil to the US Government in exchange for an equity stake in a private energy company.
4. Committee on Foreign Investment in the United States (“CFIUS”)
The 2026 midterm election is expected to influence CFIUS primarily through congressional oversight priorities and scrutiny of technological sovereignty.
- Concurrently Tracking (Outbound Investments)
The midterm results will likely also spark the legislative appetite for further tightening the Outbound Investment Security Program (“OISP”). As the Department of the Treasury rolls out expanded rules under the Comprehensive Outbound Investment National Security (“COINS”) Act targeting sectors including AI, semiconductors, biotechnology, and quantum technologies, a newly seated Congress will decide how aggressively to fund this mechanism.
- Oversight of Regulated Industries and Cross-Border Transactions
A shift to Democratic control will likely increase oversight of regulated industries and cross-border transactions. Changes in committee leadership dictate which industries draw intense scrutiny. Committees are likely to pressure the Administration to ensure robust enforcement on supply chain resilience, personal data security, and critical infrastructure. CFIUS’s focus on China remains bipartisan. A Democratic-led Congress will also likely lead to oversight of the business investments and financial dealings related to the Trump Administration and its leadership.
