Trump's midterm election defeat could weaken America's trade policies

The defeat of Donald Trump's Republican Party in the US midterm elections could change the equations of global trade. According to a report by Hindustan Times, Democrats won the majority in both the Senate and the House in the voting held on Tuesday. Through this result, American voters have expressed dissatisfaction with Trump's policies, which include tariff policies. These tariff policies and the war with Iran are considered responsible for the steadily increasing inflation. These election results have raised questions regarding Trump's trade agreements and tariff policies, which could affect relations with China, India, and America's key partner countries.

This political change could benefit an economic rival like China in ongoing negotiations. Similarly, Asian partner countries may delay promises of billions of dollars in investments to be made in America, while Europe may gain a more predictable position on uncertain trade issues. However, some partners remain cautious, as Trump is not giving signals of retreating from his tariff policies, which has spread chaos in global trade. According to Bernd Lange, Chairman of the European Parliament's Trade Committee, American protectionism will not be easily abolished. He further warned that a weakened Trump could become more aggressive and unpredictable, behaving like an angry party.

For India, which is currently negotiating trade agreements with America, these midterm results could be a reason to adopt a 'wait and see' policy. India's Commerce Minister stated earlier this month that the first phase of the India-US trade agreement is in the final stages of drafting. However, he emphasized that New Delhi will only move forward if it gains a trade advantage compared to other competing exporters. Therefore, the victory of the Democrats could provide India with an opportunity to strengthen its terms.

For China, these results could provide a stronger grip in trade negotiations. According to Saul Eslekin, an economist at Australia's Corina Economic Advisory, Xi Jinping will recognize that these results have diminished Trump's power and will be looking for ways to take advantage of it. Trump's ability to grant concessions in agreements with China could be limited by a Congress controlled by Democrats. Alicia Garcia-Herrero, Chief Asia-Pacific Economist at Natixis, noted that it is unlikely Democrats will give Trump complete freedom in agreements with China. She further added that Democrats could be stricter in technical export controls and the scrutiny of the supply chain for AI and semiconductors, which would leave Trump with less flexibility to grant concessions in these sectors. Mao Ning, spokesperson for China's Ministry of Foreign Affairs, stated that the midterm is an internal matter of America and Beijing will continue to manage differences with Washington.

America's Asian partner countries may also feel relieved by these results. Japan had promised to invest $550 billion in America and South Korea had promised $350 billion, which was done to satisfy Trump. Heo Yun, a professor of economics at Seoul's Sogang University, says that Democrats believe these investment promises were imposed on partner countries, so the pressure on countries to fulfill these promises may now decrease. However, Kazuhiro Maeshima, a professor of US Politics at Tokyo's Sophia University, stated that partner countries will not be able to exit this easily, because if Japan's response is slow, additional tariff orders could resurface.

South Korea has become a major target of Trump's anger, as Trump believes it is not fulfilling its investment promises. Recently, South Korea opposed Trump's claims regarding funding for the Alaska LNG pipeline. Ban Kil-joo, a professor of international relations at the Korea National Diplomatic Academy, stated that scrutiny by Congress on such projects could give South Korea more time to review them. South Korea's Ministry of Foreign Affairs has clarified that even if there are changes in the members of Congress, they will continue to discuss economic and trade issues with the US administration, Congress, and states.

Trade tensions have not yet fully subsided in Europe either. Although the impact has been limited by some agreements, the possibility of disputes remains. Tension could increase especially if Trump retaliates against European countries imposing digital services taxes on American tech giants or takes action against the €3 billion in public funds loans given to the European aircraft manufacturer Airbus. Meanwhile, following the Democrats' victory, Trump Media shares have seen a decline of 11%, resulting in a loss of $73 million to Trump's wealth.

Donald Trump was the President of America, and his Republican Party has recently faced a significant defeat in the midterm elections. His trade policies and tariff decisions have been a subject of discussion globally.