Context: The Democratic Party's victory in the 2026 US midterm elections gave it control of both chambers of the US Congress — the House of Representatives and the Senate.
The victory has raised expectations of greater legislative scrutiny of President Donald Trump's tariff policies and a more predictable US trade approach.
This could provide some relief to India, which has faced steep US tariffs but avoided a one-sided trade agreement involving demands for greater access to sensitive sectors such as agriculture and concessions on digital trade.
However, the change in Congressional control may not significantly alter US trade policy because both Democrats and Republicans increasingly favour economic nationalism and protectionism.
Political and Economic Factors Behind the Election Results
Cost-of-living crisis: High living costs and diesel prices contributed to public dissatisfaction with the Trump administration.
Impact of tariffs: Research indicates that much of the burden of US tariffs was passed on to American consumers through higher prices.
Iran conflict: Trump's war on Iran and the resulting closure of the strategically important Strait of Hormuz further aggravated energy-price concerns.
Public opposition to tariffs: An ABC News poll found that 64% of respondents believed tariff usage had gone too far, while a Council on Foreign Relations poll found that 83% blamed high tariffs for at least partially contributing to inflation.
Why Congressional Control May Not Restrict Trump
Executive orders: Trump has increasingly relied on executive orders to implement policies without requiring fresh Congressional approval.
Comparison: Trump issued 166 executive orders in two years, compared with 35 by Barack Obama, 42 by George W. Bush and 162 by Joe Biden during their respective tenures.
Limited legislative control: Presidents can use existing statutory powers to impose trade restrictions, sanctions and tariffs even when Congress opposes their policies.
Foreign policy autonomy: Former Indian Ambassador Mohan Kumar argues that there is no conventional 'lame-duck' US President when it comes to foreign, security and trade policy.
Illustration – Iran: Although Congress passed a War Powers Resolution in June seeking to end hostilities with Iran, presidential authority over foreign policy remains significant.
Illustration – Russia: Congress passed sanctions on Russia with veto-proof majorities in September, but Trump used a national-interest waiver to nullify their effect.
Implication: Congressional opposition may not prevent Trump from pursuing unilateral trade and foreign policy measures.
Democratic Efforts to Reclaim Congressional Authority over Trade
Legislative scrutiny: Democrats intend to challenge Trump's dominance over trade policy and restore Congress's constitutional and legislative role.
Proposed legislation: Ron Wyden, the likely incoming Chairman of the Senate Finance Committee, and Charles Schumer, the presumed Majority Leader, have introduced proposals to invalidate several Trump trade policies.
Section 301: Schumer's proposed legislation seeks to repeal certain statutory authorities invoked by Trump, including Section 301 of the US Trade Act of 1974.
Limitation: These efforts may face difficulties because both political parties support protective trade measures and domestic manufacturing.
Bipartisan Consensus on Protectionism
Economic nationalism: Both Democrats and Republicans increasingly support domestic manufacturing, stronger supply chains and protection of American industries.
China policy: There is broad bipartisan support for a tougher economic and trade approach towards China.
Trade protection: Democrats also favour protective tariffs to safeguard domestic industries and unionised workers.
WTO institutional weakening: The Obama administration blocked appointments to the World Trade Organization's (WTO) Appellate Body, contributing to its eventual paralysis. The Trump administration subsequently expanded unilateral trade measures.
Expert assessment: According to former trade official Ajay Srivastava, the midterm results are unlikely to fundamentally change America's protectionist trade direction.
US Trade Investigation and Its Implications for India
Overcapacity investigation: The Office of the United States Trade Representative (USTR) is expected to release findings of its investigation into industrial overcapacity.
Meaning of overcapacity: A situation in which a country's or industry's production capacity exceeds market demand, potentially leading to excess supply and downward pressure on prices.
Legal basis: The investigation is being conducted under Section 301 of the US Trade Act, 1974, which allows the US to respond to unfair foreign trade practices.
Existing tariff position: Tariffs on most countries other than China were reported to be in the 10–12.5% range at the time of the article.
Impact on trade partners: Findings of the investigation could determine revised tariff rates and influence the terms of future trade agreements, including negotiations with India.
Pressure onIndia: The US may intensify pressure on India to conclude a trade agreement as Trump seeks to demonstrate American economic and diplomatic influence.
Why India Must Remain Cautious
Uncertain trade environment: A Democrat-controlled Congress may increase scrutiny of Trump's policies but cannot necessarily prevent executive-led tariff actions.
Agricultural sensitivity: India needs to safeguard politically and economically sensitive agricultural sectors against demands for greater market access.
Digital trade: India must protect its regulatory autonomy while negotiating digital trade provisions.
Negotiating strategy: India should pursue mutually beneficial trade arrangements rather than accepting asymmetric concessions under pressure.
Supply-chain resilience: Strengthening domestic manufacturing and diversifying export markets can reduce vulnerability to unilateral US trade measures.
Important US Trade Policy Instruments
Provision
Significance
Section 301, Trade Act, 1974
Enables the US to investigate and respond to unfair foreign trade practices.
Section 232, Trade Expansion Act, 1962
Allows trade restrictions, including tariffs, on national security grounds.
Executive Orders
Directives issued by the US President to manage federal executive operations and implement policies within existing legal authority.
War Powers Resolution, 1973
Seeks to limit presidential military engagement without Congressional authorisation.
USTR
US government agency responsible for developing and coordinating international trade policy and conducting trade negotiations.
Way Forward
For India: Maintain strategic autonomy and negotiate trade agreements that protect domestic economic interests.
Diversification: Expand trade partnerships beyond the US to reduce dependence on individual markets.
Domestic competitiveness: Improve manufacturing productivity, infrastructure and export competitiveness.
Multilateral cooperation: Strengthen the WTO-based rules-based trading system and oppose arbitrary unilateral trade restrictions.
Negotiating preparedness: Develop sector-specific assessments of the impact of US tariffs and proposed trade concessions.
Conclusion: A change in Congressional control does not necessarily imply a change in America's protectionist trade orientation. The bipartisan consensus on economic nationalism, combined with extensive presidential executive powers, means that India must prepare for continued trade pressure while safeguarding its strategic and economic interests.
