Midterm Election Outcomes

By Erin Ennis and Angela Deng

Trade was not a major factor in Tuesday’s US elections, but the change in control of the House of Representatives may embolden Congress to take a more active role in trade policy making for the next two years.

Democrats gained 28 seats to win control of House of Representatives, but Republicans retained and slightly expanded their majority in the Senate by at least two seats; the winners in several races has yet to be determined due to close results. With divided control of Congress, President Trump’s trade agenda is unlikely to be significantly altered, since approval of legislation requires the majority of both chambers’ members. In addition, House Democrats are likely to show as much willingness as Republicans to challenge China on trade.

Tariffs were not an issue in most House races, despite US and Chinese duties that have affected many congressional districts. Of the 28 seats gained by Democrats, only nine were won by candidates who held different views of tariffs than their Republican competitors, indicating that other issues were more important to voters. In Senate races, Republicans that defeated incumbent Democrats generally agreed with the Trump administration’s use of tariffs as leverage to gain better trade agreements, though again, other issues appeared to be more important to voters. In yet-to-be-decided races in Arizona and Florida, Republican candidates supporting the administration’s trade agenda appear likely to win once final votes are tallied.

While they may not disagree with the administration’s prioritization of China trade issues, House Democrats may be more active in criticizing the administration’s tactics than the current Republican majority has been. Representative Richard Neal (D-MA) is expected become the Chairman of the House Ways and Means Committee, which controls trade issues, and Representative Bill Pascrell (D-NJ) is likely to become the Chairman of its Trade Subcommittee. Both lawmakers have pushed the Trump administration to turn over documents to Congress to clarify the the end goal of its various tariffs and to clarify its broader trade strategy toward China. While critical of the administration’s specific tactics, both Neal and Pascrell have supported efforts to  address China’s trade practices.

In the Senate, two of the top Republicans who have criticized aspects of the administration’s trade policies are retiring, and it is unclear how actively their successors will engage on these issues.

Chairmanship of the Senate Foreign Relations Committee Chairman is expected to move from Senator Bob Corker (R-TN) to Senator Jim Risch (R-ID). Risch has generally supported the administration’s trade policies and has been critical of China, but has expressed concerns about the use of tariffs to address problems with China. Risch and Senator Mike Crapo (R-ID) weighed in with the administration this summer expressing concerns about legal proceedings against Idaho-based Micron Technology’s case by Fujian Jinhua, which Micron had accused in US courts of stealing its DRAM technology. Last week, the administration took actions against Fujian Jianhua that may affect its ability to do business going forward.

On the Senate Finance Committee, the retirement of Senator Orrin Hatch (R-UT) creates an opportunity for Senator Chuck Grassley (R-IA) to choose between his existing chairmanship of the Senate Judiciary Committee or returning to chair Finance, which he led from 2003 to 2007. If Grassley remains chairman of Judiciary, Crapo is likely to become the chairman of the Senate Finance Committee, opening the chairmanship of the Senate Banking Committee to Senator Pat Toomey (R-PA). Grassley supports President Trump’s tougher stance on China’s trade practices and industrial policies, but he has been critical of the impact of the trade war on US agriculture. Grassley has expressed his worries several times to President Trump about the business uncertainty caused by US tariffs, but has supported the administration’s agriculture aid program. Crapo similarly has expressed concerns about some aspects of the administration’s China trade tactics.