What Every Multinational Should Know About … The Impact of the 2026 U.S. Midterm Elections on U.S. Trade Policy

The 2026 U.S. midterm elections have produced a decisive shift in Washington. Although a few races remain uncalled, Democrats have secured control of Congress and will exert significant influence over how Congress engages with the Trump administration on international trade and tariffs, regulatory, and national security matters.

The elections will not immediately transform the legal framework of U.S. trade policy, which remains largely driven by the executive branch. The new majority in Congress will, however, substantially reshape the political trajectory of international economic policy — not only on high‑profile issues such as tariffs, but also on less visible but equally critical areas such as economic sanctions, export and technology controls, customs enforcement, investment, and anti‑corruption enforcement. To help multinational companies anticipate and plan for these changes, this article outlines the most likely international trade changes we see coming over the next two years.

Tariffs & Customs

Tariff Policy: Expect Aggressive Congressional Push Back Against Trump Tariffs, Even as the Administration Likely Pursues Additional Tariff Actions

In the immediate aftermath of the election, Democratic leaders have publicly committed to dismantling the Trump administration’s tariff program, with particular emphasis on the Canada‑focused measures. Minority Leader Hakeem Jeffries (D‑N.Y.), expected to be the next Speaker of the House, stated that voters had clearly demanded “a dramatic change in direction” and, in a letter to his colleagues, urged that the House vote within its first 100 days to “eradicate the Trump tariffs.”

On the House side, the Ways and Means Committee would lead repeal efforts. Its expected new chairman, Representative Richard Neal (D‑Mass.), has framed the election result as evidence that voters are “tired of … price‑hiking tariffs every time they visit the checkout counter or the gas pump.” In the Senate, Senator Ron Wyden (D‑Ore), likely to chair the Finance Committee, has similarly pledged to “reassert congressional authority over our country’s trade policy to bring down costs, end Trump’s disastrous and corrupt tariffs, reestablish critical trade partnerships, and hold trade cheats accountable.” Senator Wyden has described support for repealing the Canada‑focused tariffs as “overwhelming,” while expected incoming Senate Majority Leader Chuck Schumer (D‑N.Y.) has likewise argued that Republican acquiescence to Trump’s tariffs contributed to last Tuesday’s results. Senator Schumer has suggested that Democrats will “go forward with them or without them,” signaling a willingness to pursue tariff reform even without significant Republican cooperation.

These statements underscore a strong push by Democratic leadership to pursue legislative rollback of or limitations on Trump‑era tariffs, likely starting with the Section 338 Canada tariffs. The legal and political architecture of U.S. trade policy, however, imposes significant constraints. After the Supreme Court invalidated the IEEPA‑based tariffs (International Emergency Economic Powers Act tariffs), the administration shifted to other authorities — Section 122 and Section 301 of the Trade Act of 1974, Section 232 of the Trade Expansion Act of 1962, and Section 338 (the basis for the current Canada tariffs). These authorities firmly vest tariff policy in the executive branch. Any attempt to narrow or reconfigure them would require legislation that can survive a presidential veto, therefore requiring substantial Republican support in both chambers.

Efforts to repeal the particularly unpopular Canadian tariffs are likely to serve as an early test of whether sufficient bipartisan supports exists to rein in the administration’s broad use of tariff powers, considering the clear message that U.S. voters are looking for practical steps to address inflation. Over the past two years, a handful of congressional Republicans have sided with Democrats in voting to rebuke President Trump’s tariffs. Among them are Senators Rand Paul (R-KY) and Lisa Murkowski (R-AK), both of whom will remain in office when Democrats assume control of Congress in January. The question moving forward is whether more Republicans will join Democrats in these legislative efforts, or whether the fear of bucking President Trump will hurt their chances for reelection.

Even if Democrats cannot fully “eradicate” the Trump tariffs, their control of Congress will change the politics and process around tariff policy. Democrats will continue to frame tariffs as a direct contributor to higher grocery, fuel, household, and auto‑related costs, putting Republicans in the difficult position of deciding whether to cast votes to support President Trump’s trade agenda or recalibrate in response to recent electoral losses. House Ways and Means and Senate Finance are likely to convene extensive oversight and hearings on the impact of tariffs on consumer prices, supply chains, domestic industry, and cross‑border trade with Canada, as a means of exerting sustained pressure on the administration to moderate its use of tariffs.

Practical Takeaways: Multinationals should treat Canada‑specific tariff repeal, and other tariff repeal, as a realistic possibility but not a certainty, and should continue to plan for sustained tariff exposure. In practice, that means maintaining contingency plans for different tariff scenarios and stress‑testing pricing and sourcing strategies. Companies that rely on imports should also plan on potential increases in Section 301 and Section 232 tariffs by as early as the end of this year, when the Section 301 manufacturing oversupply investigation will be completed. Businesses should consider engaging federal lobbyists to help navigate the evolving tariff landscape, advocate for their interests before Congress and the administration and prepare for potential congressional hearings or consultations where company data on tariff impacts may be requested.

International Emergency Economic Powers Act (IEEPA) Tariff Refunds: Expect Hearings Regarding the Impact of Tariffs on Consumers and the Issue of Tariff Refunds Going Solely to Importers

Following the Supreme Court’s invalidation of the Trump administration’s IEEPA‑based tariffs, key Democrats, including Senator Elizabeth Warren, have argued that because consumers ultimately bore a significant share of the tariff burden through higher prices, they should share in any IEEPA refunds. Under current practice, those refunds go to the importers who paid the duties, even though the economic incidence of the tariffs was widely felt by households and downstream businesses.

The new Congress is likely to use letters and hearings to spotlight this concern, focusing on large multinationals and major retailers that have received substantial refund payments. Those hearings will frame IEEPA refunds as corporate windfalls in a context where voters are struggling with elevated prices. Congress may also explore more aggressive policy responses, such as requiring public reporting of significant IEEPA refunds by publicly traded companies, mandating some form of sharing or pass‑through of refunds, or even creating a special “IEEPA windfall tax” to channel funds into consumer relief or other public programs. While any such measures would face legal and practical hurdles, they underscore that tariff‑related financial flows are likely to attract heightened political and public scrutiny.

Practical Takeaways: Multinationals that received IEEPA‑related tariff refunds should anticipate heightened public and congressional scrutiny. Firms should prepare clear explanations of how tariff costs and refunds affected pricing and investment decisions, consider the optics of large refund receipts, and monitor potential proposals for disclosure obligations or “windfall” taxes that could affect future refund treatment or require additional reporting.

Customs Enforcement: Expect Continuing Strengthening of Enforcement

While the midterm elections will reshape congressional oversight and action on trade policy, customs enforcement itself remains within the control of the executive branch. U.S. Customs and Border Protection (CBP), along with the Department of Justice, will continue to drive day‑to‑day and strategic enforcement decisions independently of the new Democratic majorities in the House and Senate.

We accordingly do not see the election as meaningfully altering the administration’s willingness to deploy more aggressive enforcement mechanisms, including civil False Claims Act cases and, in some instances, criminal investigations of customs violations, duty evasion, or fraud. Nor do we see any impetus to slow the use of AI and data‑mining techniques to identify potential tariff underpayments and misclassifications. Although the new congressional majorities will be concerned about the burden of tariffs on consumers and industry, those concerns will not translate into sympathy for importers who are not paying the full tariffs due on their imports. The risk of high‑profile enforcement actions against underpayment and evasion is likely to remain elevated.

Practical Takeaways: Importers should expect continued aggressive customs enforcement, both administratively and through increased DOJ activity. Practically, that means investing in robust classification, valuation, and origin controls; reassessing customs risk in light of CBP’s increasing use of AI and data analytics; and ensuring that internal audits and remediation efforts are well documented in anticipation of possible False Claims Act or criminal inquiries.

Supply Chain Integrity: Expect Continued Bipartisan Support for Enhanced Efforts to Keep Forced Labor, Human Trafficking, and UFLPA-Linked Goods Out of U.S. Supply Chains  

Concerns about forced labor, human rights abuses, national security, and fraud in complex global supply chains are a bipartisan priority. The Uyghur Forced Labor Prevention Act (UFLPA) is emblematic of this trend: it was a bipartisan bill when passed, and there is little political appetite — on either side of the aisle — to relax scrutiny of goods linked to Xinjiang. The same is true of efforts to minimize the use of forced labor and human trafficking in goods entering the United States or produced abroad by U.S. corporations.

Practical Takeaways: In practice, firms that invest in traceability, independent auditing, and clear documentation of sourcing decisions, particularly for goods that may intersect with UFLPA or other forced‑labor concerns, will be better positioned to manage enforcement risk and reputational scrutiny in the post‑2026 environment.

USMCA Review: Expect More Attention on Worker Issues and a Push for Stability

The United States-Mexico-Canada Agreement (USMCA) did not feature prominently in the 2026 campaign; if it had, voters likely would have viewed it skeptically rather than enthusiastically. At the same time, many important U.S. industries — particularly the automotive sector — see USMCA as vital to their competitiveness and supply‑chain planning. Against that backdrop, the dominant impulse in a newly Democratic Congress is likely to be to preserve the basic framework of North American free trade and to return to a situation of stability and predictability in regional rules, while using the upcoming review process to push harder on labor protections and other worker‑oriented priorities.

It is important to recognize that free trade agreements are passed by Congress, giving Congress a role in the ongoing review if it so chooses. Congressional leaders are more likely to focus on whether existing obligations are being enforced in ways that deliver tangible benefits to workers in the United States. That will translate into greater attention to USMCA’s labor chapter and worker protection provisions, particularly in sectors such as autos and auto parts, and more sustained engagement with the Office of the United States Trade Representative (USTR), the Department of Labor, and other agencies as the review proceeds. For multinationals, the likely outcome is a more demanding enforcement environment on labor and related issues, but with the hope of more stability in the fundamental trade framework that underpins North American integration than has occurred over the last eighteen months.

Practical Takeaways: Companies with significant North American operations should assume USMCA’s core framework will remain in place but that enforcement of labor and related worker protections will become more demanding. Practically, that means reviewing labor practices and supply‑chain structures in USMCA‑relevant sectors (especially autos and auto parts), ensuring documentation supports compliance with USMCA’s labor chapter, and engaging early with industry groups and USTR consultations on the upcoming review.

Export Controls and Sanctions

Sanctions: Expect Russia to Be a Focus, With Lesser Attention to Iran and Venezuela

Sanctions remain predominantly a tool of the executive branch but, from time to time, Congress has become directly involved in economic sanctions matters. Because of President Trump’s decision to waive sanctions authorized against Russia under the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, expect economic sanctions imposed against Russia due to its actions in Ukraine to be an early congressional priority. Democratic leaders are likely to push for full implementation of the financial and energy restrictions contained in the Graham legislation, perhaps through actions to strip the President of his Section 115 waiver authority. Hearings regarding the controversial decision to allow for diesel imports from Russia, as well as investigations and subpoenas targeting any companies involved in importing this fuel, are also likely to be an early focal point.

Although the incoming Congress is expected to take steps to rein in the administration’s ability to wage war against Iran, we do not expect this to translate into any push to weaken economic sanctions against the Iranian government, designated persons, or key sectors of the Iranian economy. Indeed, the prevailing view among many Democrats is that robust sanctions should serve as an alternative to war and as a means of pressuring the Iranian government to avoid destabilizing actions in the Middle East and beyond. There likely will be no real constituency for the easing of sanctions against Iran.

Venezuela is likely to be the most complex sanctions area to parse. While Democrats may not reverse recent limited relaxations wholesale, they are likely to probe high‑profile energy deals and OFAC licensing practices, increasing transparency and compliance demands on companies involved in Venezuelan oil and infrastructure. Companies engaged in or contemplating activity in Russia, Iran, or Venezuela should expect closer congressional scrutiny of sanctions implementation and a political environment that generally favors stricter enforcement over further relaxation.

Practical Takeaways: Companies with any exposure to Russia, Iran, or Venezuela should expect a more assertive sanctions environment and closer scrutiny of licenses and waivers. In practice, this means conducting updated sanctions risk assessments, reviewing reliance on general or specific licenses, building in contingencies for potential tightening (especially in energy and financial sectors), and ensuring that board and senior management are briefed on sanctions developments and associated business risks.

Cartels and Transnational Criminal Organizations: Expect Oversight of Military Strikes Alongside Sustained Enforcement

In the area of cartels and transnational criminal organizations (TCOs), the administration has already been pivoting toward a more aggressive, security‑driven approach; that trajectory is likely to continue irrespective of the new Democratic majorities in Congress. A key early focus for legislators, however, will be the administration’s expanding use of drones and attacks on ships at sea in cartel‑related operations. Members in both parties have raised concerns that these military‑style actions may not always be precisely targeted at drug traffickers and that, in some cases, they may blur traditional lines between law‑enforcement interdiction and armed conflict. Expect hearings that question the criteria for target selection, the safeguards against civilian or non‑cartel casualties, and whether the administration should return to a more traditional interdiction model — centered on boarding, seizure, and arrest — rather than reliance on remote strikes.

Beyond the use of force, we expect the broader enforcement posture against cartels and TCOs will remain firmly in place and may intensify. The emphasis on drug cartels, narcotics trafficking, and associated smuggling networks — often linked to wider concerns about border security, migration, and regional stability — has become a central pillar of U.S. enforcement and security policy. From a trade and enforcement perspective, this translates into sustained, and potentially increased, use of sanctions (including designations under counter‑narcotics and transnational crime authorities), asset freezes, trade‑based money‑laundering investigations, and tighter scrutiny of logistics and supply chains operating through high‑risk corridors. Democratic control of Congress is unlikely to constrain these tools; if anything, congressional attention will focus on oversight of how they are used, not whether they should be used.

Multinationals operating in sectors or regions where cartel or TCO activity is a material risk — logistics, energy, mining, agriculture, and border‑adjacent industries in particular — should therefore anticipate continued, and possibly heightened, scrutiny of their counterparties and trade flows, with any congressional focus on drones and maritime operations serving as a complement to, rather than a substitute for, robust sanctions‑based enforcement.

Practical Takeaways: Firms operating in sectors or regions where cartel or TCO activity is a material risk should anticipate continued, and possibly intensified, scrutiny of counterparties and trade flows. Practical steps include strengthening third‑party due diligence, monitoring high‑risk routes and logistics providers, aligning internal investigations and escalation processes with sanctions and anti-money laundering (AML) expectations, and being prepared to respond to inquiries if operations intersect with areas subject to heightened enforcement or military‑style interdiction.

Export Controls: Expect Continued Focus on China

The elections will not rewrite the fundamental export‑control framework, which is driven by executive orders and agency regulations. Moreover, concern about China’s access to critical U.S. technologies is strongly bipartisan. As a result, we do not expect even a Democratic‑led Congress to push for easing controls on semiconductors, AI technology, quantum technologies, advanced manufacturing equipment, or other sensitive goods and technology.

Instead, the most likely trajectory is continued reinforcement of existing controls, incremental tightening in select areas, and more aggressive enforcement of licensing and end‑use restrictions. For multinationals in technology‑intensive sectors, this means that planning assumptions built on stringent China‑related controls remain valid, and any congressional activity in this space is more likely to support than to dilute the current direction of policy.

Practical Takeaways: Multinationals, particularly in technology‑intensive sectors, should plan for continued tightening of China‑related controls and more rigorous licensing scrutiny. Firms should map their exposure to controlled technologies and China‑related transactions, proactively review licensing and end‑use procedures, and build export‑control considerations into product design, R&D collaboration, and market‑entry strategies.

CFIUS and Outbound Investment: Expect Expanded Scrutiny of Capital Flows

We do not anticipate major changes or challenges to how the administration has been using the Committee on Foreign Investment in the United States (CFIUS). Both Republicans and Democrats have historically shown concern about foreign access to important U.S. technologies and sensitive personal information, particularly where China is concerned. Transactions involving China, AI, data centers, cloud services, sensitive personal data on U.S. persons, health data, logistics, and energy will continue to face more probing questions, longer timelines, and potentially more conditions or mitigation requirements, as well as the possibility of outright rejections.

In parallel, the Outbound Investment Security Program (OISP) under the Comprehensive Outbound Investment National Security Act (COINS Act) will begin to influence outbound capital flows in AI, semiconductors, biotechnology, and quantum technologies. The new Congress will determine how aggressively this regime is resourced and enforced. Democratic majorities are likely to support a robust program, increasing scrutiny of U.S. investments in sensitive foreign sectors and reinforcing the trend toward treating capital flows as a national‑security tool, not just an economic issue.

Practical Takeaways: Multinationals and financial investors should assume that both inbound and outbound investments involving sensitive technologies, data, or China‑related exposure will face probing review. Practically, this means integrating CFIUS and OISP analysis into deal planning from the outset, building realistic timelines and mitigation costs into transaction models, and maintaining detailed documentation that supports national‑security risk assessments and proposed safeguards.

FCPA: Expect Legislative Efforts to Push for Ramped-Up Enforcement

Enforcement of the Foreign Corrupt Practices Act (FCPA) has dropped sharply under the Trump administration, both in terms of the number of corporate cases and the aggressiveness of penalties and individual prosecutions. That decline has not gone unnoticed by lawmakers and enforcement advocates, particularly against a broader backdrop of public concern about corruption, self‑dealing, and conflicts of interest in Washington. The 2026 election results suggest that voters are receptive to anticorruption themes, creating a favorable political environment for renewed focus on FCPA enforcement and related integrity measures.

In this context, the new Democratic majorities in Congress are likely to treat the FCPA as a natural vehicle for signaling a tougher stance on corruption, both at home and abroad. Hearings in House Financial Services, House Oversight, and Senate Banking or Judiciary could be used to highlight instances where weak enforcement or policy choices may have allowed questionable conduct to go unpunished, including in high‑risk jurisdictions and sectors. Legislators may also explore statutory or regulatory changes to strengthen anticorruption rules — such as clarifying whistleblower protections, tightening disclosure requirements, or encouraging closer coordination between FCPA enforcement and sanctions/AML regimes. For multinationals, this points toward a probable shift back to more robust FCPA enforcement and a heightened expectation that companies maintain strong, well‑documented anticorruption compliance programs capable of withstanding renewed scrutiny.

Practical Takeaways: For multinational companies, the practical takeaway is that FCPA compliance remains critically important, even after a period of relatively subdued enforcement. Because the FCPA has a five‑year statute of limitations that can often be extended (for example, where evidence is located abroad), conduct occurring today can be the subject of investigations and penalties many years down the road. That means companies operating in high‑risk countries or sectors must continue to invest in robust, well‑documented anticorruption programs, strong internal controls, and effective reporting and investigation mechanisms. Doing so not only reduces legal and financial exposure when enforcement ramps up again, but also positions companies to demonstrate good‑faith efforts at compliance if past conduct comes under renewed scrutiny.

The Democrats’ return to power in Congress changes the direction and tone of U.S. trade and economic‑security policy debates. It does not, by itself, guarantee immediate relief from Trump‑era tariff measures or a wholesale reset of the tools the administration has been using. Most of the key instruments — tariff authorities under the Trade Act, Trade Expansion Act, and Tariff Act; sanctions programs; export controls; customs enforcement; CFIUS; and cartel‑related enforcement — remain firmly rooted in executive power and insulated by veto and filibuster constraints.

For multinationals, the strategic implication is that the core architecture of U.S. trade and enforcement policy is likely to remain in place. But the new Congress may reshape how these tools are supervised or used moving forward and, if there is sufficient bipartisan pushback to restore the role of Congress in tariff policy, then a veto-proof bill to rein in executive tariff authority could be on the horizon. The USMCA review will provide a forum for pushing worker‑focused priorities while reaffirming the value of stable, predictable North American rules.

Multinationals that assume continuity in the underlying legal regimes, while planning for sharper congressional oversight and targeted reforms, will be best positioned to navigate this environment. In practical terms, that means:

• treating tariff rollback as a possibility, not a baseline assumption, and planning for sustained exposure to tariffs with scenario‑based hedging;
• significantly investing in enhanced customs compliance, post-entry checks, broker oversight, and other key areas designed to avoid potential underpayments and penalties;
• strengthening supply chain integrity and oversight of the ethical oversight of suppliers and sub-suppliers;
• preparing for public scrutiny of tariff refunds, sanctions exposure, cartel‑related risks, and foreign and outbound investment flows; and
• ensuring FCPA and broader anticorruption controls are robust enough to withstand renewed investigative and legislative attention.

The post‑2026 landscape will involve intensified oversight, selective recalibration, and continued reliance on powerful executive‑branch tools. Companies that read the political signals carefully, invest in compliance and transparency, and maintain flexible trade and supply‑chain strategies will be better equipped to manage both the continuity and the change that the new Congress will bring.