BGA Head of Research Murray Hiebert wrote a client update on the U.S. midterm elections and their implications for the Indo-Pacific.

Context

  • The United States votes November 3 in bitterly contested midterm elections for the House of Representatives and the Senate. Most forecasters agree that Democrats are favored to win the House, but the Senate remains close and is a toss-up. A Democratic majority in Congress could constrain and hamper President Donald Trump, but they likely could not reverse any of his economic or foreign policies.
  • The cost of living, exacerbated by rising gas prices, is the top issue in most opinion polls. A recent Reuters/Ipsos poll found only 17 percent of Americans approved of Trump’s handling of rising prices.

Significance

  • The widely held view of analysts is that a Democratic Congress could constrain Trump and put some roadblocks in his path, particularly on budget and funding matters, but could not overturn the president’s policies. Trump still holds a veto over congressional measures and has extensive executive powers.
  • Some Democratic leaders in the House say they will take steps to overturn Trump’s tariffs if they win the House. Nevertheless, the administration retains outsized power over trade and tariffs.

Implications

  • U.S.-China relations over the next year will largely hinge on what the two sides agree to when the trade truce expires in January. Beijing likely already sees the midterm elections as a sign of volatility in Washington, not a shift in China policy.
  • Both parties support moving supply chains out of China, so economies such as Vietnam and Malaysia would continue to benefit from companies doing so. However, neither party will ease scrutiny of Chinese content, excess capacity and transshipment through the region, so the policy framework driving investment into these markets will continue to generate penalties for the same markets,

We will continue to keep you updated on developments in the Indo-Pacific. If you have questions or comments, please contact BGA Head of Research Murray Hiebert.

For questions or additional information, please contact the relevant BGA expert below:


Best regards,

BowerGroupAsia

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Head of Research

Murray is a top Asia expert and skilled researcher with three decades of experience living and working in Asia. His networks in business, media and government circles are deep and wide-ranging. He is also a senior associate of the Southeast Asia Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Earlier he served as deputy director of the program for six years. Prior to joining CSIS, Murray served for five years as senior director for Southeast Asia at the U.S. Chamber of Commerce where he worked with leading American companies, the U.S. government and Southeast Asian ... Read More