A backlash against President Donald Trump's Republican Party over rising living costs in the US midterm elections could embolden countries around the world to resist his combative trade policies, which have raised prices for American consumers, Reuters reported on Wednesday, November 4.

Source: Reuters

The reaction follows the result Awaaz Punjab reported earlier, when Democrats captured majorities in both the Senate and the House of Representatives. Read the earlier story: Democrats win House majority in the midterms

Democrats captured majorities in both the Senate and House on Tuesday, as US voters delivered a stinging rebuke for Trump's policies, specifically tariffs and the Iran war, which they blame for persistent inflation, Reuters said. That could give countries more reason to slow-walk investment pledges they made to stave off tariffs, and hand economic rival China a perceived upper hand in ongoing trade talks, political analysts and economists said.

Source: Reuters

Japan and South Korea: allies may feel less pressure

Japan and South Korea, America's closest allies in Asia, promised $550 billion and $350 billion respectively in US investments last year under deals with Trump — yaani, together $900 billion, roughly Rs 84 lakh crore at recent rates. 'Democrats seem to perceive that the investment commitments were forced on allies,' said Heo Yoon, an economics professor at Sogang University in Seoul, adding that countries might now feel less pressure to fulfil such commitments. But others cautioned that Trump, criticised at home, could squeeze allies harder abroad: 'The tariff issue is not over. If Japan's response is slow, calls for additional tariffs could resurface,' said Kazuhiro Maeshima, a professor of US politics at Sophia University in Tokyo.

Source: Reuters

South Korea has become a lightning rod for Trump's anger at countries he believes have not lived up to investment pledges; most recently, Seoul pushed back on Trump's assertions that it had agreed to fund Alaska LNG, a liquefied natural gas pipeline project. While Trump can still wield executive power over tariff policy, Ban Kil-joo, an international relations professor at the Korea National Diplomatic Academy, said scrutiny from Congress over such projects could give Seoul 'more valuable time' to review and assess them.

Source: Reuters

India: a reason to wait — and a warning not to relax

For countries like India, still negotiating trade deals with the United States, the midterm results could provide an incentive to adopt a wait-and-see approach, analysts said. India's trade minister said earlier this month that the first phase of an India-US trade deal was in the final stages of drafting, but reiterated that New Delhi would proceed only if it secures an advantage over competing exporters; New Delhi and Washington agreed in February to a framework that reduced to 18 percent from 50 percent a punitive tariff on most Indian goods, imposed in August last year after an earlier round of talks collapsed. After the midterms, the White House may face greater pressure to avoid a return to trade wars that could further raise costs for American consumers, said Tommy Xie, head of Asia macro research at OCBC Bank.

Source: Reuters

'Countries such as India should remain cautious. A Democratic victory will not necessarily make Trump more accommodating towards any country,' said Rajiv Bhatia, a former Indian diplomat and distinguished fellow at Gateway House. Bhatia added that India should undertake greater diplomatic preparation and engage more actively with the US Congress to press its concerns on trade, tariffs and visa-related issues.

Source: Reuters

China: no free rein with Beijing

China, which has struck a fragile trade truce with the United States that expires in January, will be thinking of ways to use Trump's political fragility to strengthen its hand in trade talks, analysts said. 'Xi Jinping will recognize that Trump's authority has been greatly weakened by these results, and will no doubt be thinking about ways of exploiting that,' said Saul Eslake, an economist at Corinna Economic Advisory in Australia. But others said Trump's travails are not necessarily good news for Beijing: the US president has gone to great lengths to improve relations with Xi — including hosting him for a lavish state visit last month — and a Democratic-controlled Congress may constrain his ability to offer sweeteners for future deals.

Source: Reuters

'Democrats are unlikely to give Trump free rein on deals with Beijing,' said Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis, adding that they had already criticised Trump's summits with Xi for limited substance on key issues like AI. A Democratic Congress is more likely to support tighter tech export controls and scrutiny of supply chains for AI and semiconductors, which will give Trump less flexibility on concessions impacting those high-growth segments, she added.

Source: Reuters

China's own public response was deliberately neutral. 'The midterm elections are an internal affair of the United States,' foreign ministry spokeswoman Mao Ning told a regular news briefing in Beijing on Wednesday. 'China is willing to continue working with the US to uphold and implement the important consensus reached by the two heads of state, strengthen communication, properly manage differences, expand cooperation, and build a constructive, strategically stable China-US relationship based on the principles of respect, fairness, and reciprocity.'

Source: Agencies via HK Businesswire

In Europe, French Finance Minister Roland Lescure said Trump remained in charge on foreign policy despite the Republican defeats, adding that the American leader was unpredictable: 'Either he decides to rise above the fray — acknowledging that changes are necessary, particularly regarding gasoline prices, which directly affect people — and, I might add, he tones down his international involvement; or he does not,' Lescure told French TV channel BFM. 'Frankly, this is something we will need to keep an eye on in the coming days.'

Source: Agencies via HK Businesswire

What happens next

Trump's next major international outing will be a trip to Asia later this month, where he is due to meet Southeast Asian leaders in the Philippines and then join the Asia-Pacific Economic Cooperation (APEC) forum in Shenzhen, China, Reuters said. Whether trading partners slow-walk their pledges, whether Trump squeezes harder to prove his policies work, and how Beijing uses the January truce deadline are the tests ahead — and, as the analysts quoted by Reuters stress, none of those outcomes is settled yet.

Source: Reuters