Despite the Democratic Party gaining control of both chambers of Congress in the U.S. midterm elections, analysts predict that the tariff-centric trade policies of the Trump administration will remain in place for the foreseeable future. While congressional power has shifted, the president's authority over tariffs will continue, presenting potential opportunities for South Korean companies in the shipbuilding, semiconductor, and energy sectors.
The Korea Trade-Investment Promotion Agency (KOTRA) released a report on November 5, titled 'Implications of the 2026 U.S. Midterm Election Results.' In the elections held on November 3, the Democratic Party secured 54 seats in the Senate and 228 seats in the House of Representatives as of 7 a.m. on November 4, establishing a majority in both chambers.
KOTRA assessed that even with the Democratic Party strengthening its budget and executive oversight powers in the 120th Congress starting in January, significant changes to tariff policies are unlikely. This is due to the Trump administration's reliance on Section 301 of the Trade Act and Section 232 of the Trade Expansion Act to impose tariffs. Even if the Democrats attempt to limit tariff authority, the president's veto power could pose a significant obstacle.
Concerns have been raised that tariffs targeting specific items, such as steel and automobiles, as well as policies aimed at countering China, are likely to persist. Ongoing investigations under Section 301 regarding structural overproduction affecting 16 economic zones, including South Korea, are also considered a key variable.
While congressional power has shifted, the retention of tariff authority and related laws suggests that domestic exporters should prioritize responding to existing trade regulations over the possibility of tariff reductions.
In terms of industry, there may be expanded policy support opportunities in shipbuilding, semiconductors, and energy. The 'SHIPS for America Act,' aimed at revitalizing the shipbuilding industry, is a bipartisan bill. There is interest in whether provisions for shipyard investment subsidies and expanded U.S. shipping requirements will be included in the defense authorization bill expected to be finalized by the end of the year.
In the semiconductor sector, the extension of the factory investment tax credit, which is set to expire at the end of this year, is crucial. Both parties have shown favorable positions toward the extension, which could impact South Korean companies investing in local production facilities.
In the energy sector, there is bipartisan agreement on expanding transmission networks, which could create business opportunities for power equipment suppliers. However, discussions regarding regulations on power and water usage for data centers may proceed separately.
Changes in state policies must also be monitored. With shifts in the political party of governors in states like Georgia and Texas, where South Korean investments are concentrated, regional tax incentives and permitting policies may change.
Lee Geum-ha, head of KOTRA's North America headquarters, stated, 'Despite the Democrats controlling both chambers, the tariff framework will remain, but there may be opportunities for our companies in bipartisan areas such as shipbuilding, semiconductors, and energy.' He emphasized the need to strengthen support for monitoring local legislative trends.
* This article has been translated by AI.
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