US midterm losses may embolden trade partners to resist Trump

Donald Trump's Republican Party suffered significant losses in Tuesday's US midterm elections, with Democrats winning control of both the Senate and House. This outcome may embolden trade partners to resist his combative policies, though they risk provoking him during his final two years in office. Voters delivered a rebuke of Trump's tariffs, which alongside the Iran war have been blamed for persistent inflation. China could gain leverage in ongoing talks, Asian allies may slow-walk investment commitments, and Europe might see more predictability on unresolved trade issues. However, some partners remain cautious, as a weakened Trump could become more aggressive. Japan and South Korea, which pledged $550 billion and $350 billion in US investments respectively, may feel less pressure to fulfill commitments, though tariff threats could resurface. Europe faces potential disputes over digital services taxes and Airbus subsidies, while India may adopt a wait-and-see approach on trade negotiations. China's truce with Trump expires in January, but a Democratic Congress could constrain his ability to offer concessions.