Democrats Seize Control of Congress: What It Means for Trump, Europe and Markets
World
Democrats have secured a convincing victory in the US midterm elections, taking control of both the House of Representatives and the Senate. The results dealt a serious political blow to Donald Trump and set the stage for a more intense confrontation between the White House and Congress. The elections also produced historic outcomes, with several representatives of minority groups winning senior public offices for the first time.
According to preliminary results, by 7:40 a.m. Central European Time, Democrats had secured 220 seats in the House of Representatives — two more than the 218 needed for a majority. In the Senate, the party won back seven seats from Republicans, including in Texas, Ohio, Kansas and Maine. The new Congress will begin its work in January. Until then, Republicans retain control of both chambers.
In Georgia, Kisha Lance Bottoms became the first Black woman elected governor of the state. In New Hampshire, Democrat Chris Pappas won the Senate race and will become the first openly gay member of the US Senate. In New Mexico, Deb Haaland, who previously served as interior secretary in Joe Biden’s administration, was elected the first woman from an Indigenous community to become the state’s governor. In Texas, Gina Hinojosa became the first Latina to lead the state’s executive branch. House Democratic leader Hakeem Jeffries now has the opportunity to become the first Black Speaker of the House.
For Europe, the shift in the balance of power does not mean an automatic end to tariff pressure. Following a Supreme Court ruling, the Trump administration moved some tariffs to Section 301 of US trade law, a mechanism that allows the president to act without a separate vote in Congress. Democrats will be able to hold hearings and delay the confirmation of presidential nominees, but their ability to restrict the president’s tariff powers remains limited.
Uncertainty also surrounds US support for Ukraine. Democrats will be able to push for new funding and oversee the relevant congressional committees. However, the White House can delay the use of funds already approved by Congress. European governments are therefore being advised to treat allocated sums as a political intention until the money has actually been delivered.
Markets reacted cautiously. The euro gained 0.4% to $1.1232, while gold rose 2% to $4,011 an ounce and silver climbed 3.4% to $51.49. US and European stock futures edged lower, while the yield on 10-year US Treasury bonds fell to 4.94%. Bitcoin traded at around $77,700, while Brent crude remained near $104 a barrel.
A divided government usually limits major legislative initiatives, which can be favourable for investors. However, upcoming disputes over the federal debt ceiling could increase borrowing costs. The dollar’s performance will also continue to depend largely on decisions by the Federal Reserve, rather than on Congress alone.
In Georgia, Kisha Lance Bottoms became the first Black woman elected governor of the state. In New Hampshire, Democrat Chris Pappas won the Senate race and will become the first openly gay member of the US Senate. In New Mexico, Deb Haaland, who previously served as interior secretary in Joe Biden’s administration, was elected the first woman from an Indigenous community to become the state’s governor. In Texas, Gina Hinojosa became the first Latina to lead the state’s executive branch. House Democratic leader Hakeem Jeffries now has the opportunity to become the first Black Speaker of the House.
For Europe, the shift in the balance of power does not mean an automatic end to tariff pressure. Following a Supreme Court ruling, the Trump administration moved some tariffs to Section 301 of US trade law, a mechanism that allows the president to act without a separate vote in Congress. Democrats will be able to hold hearings and delay the confirmation of presidential nominees, but their ability to restrict the president’s tariff powers remains limited.
Uncertainty also surrounds US support for Ukraine. Democrats will be able to push for new funding and oversee the relevant congressional committees. However, the White House can delay the use of funds already approved by Congress. European governments are therefore being advised to treat allocated sums as a political intention until the money has actually been delivered.
Markets reacted cautiously. The euro gained 0.4% to $1.1232, while gold rose 2% to $4,011 an ounce and silver climbed 3.4% to $51.49. US and European stock futures edged lower, while the yield on 10-year US Treasury bonds fell to 4.94%. Bitcoin traded at around $77,700, while Brent crude remained near $104 a barrel.
A divided government usually limits major legislative initiatives, which can be favourable for investors. However, upcoming disputes over the federal debt ceiling could increase borrowing costs. The dollar’s performance will also continue to depend largely on decisions by the Federal Reserve, rather than on Congress alone.
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