Midterms in the USA: IW: US midterm elections are unlikely to change Trump's tariff course

Frankfurt/Main. According to the German Economic Institute (IW), the upcoming midterm elections in the USA are unlikely to bring any relief to US President Donald Trump's customs policy. “German companies should expect that the direction of economic and customs policy will remain in place until at least January 2029,” writes the IW in a study with a view to the regular end of Trump’s term in office.

An opposition majority in the US Congress after the midterms would probably be too narrow to override a presidential veto. "The USA remains an important trading partner for Germany and the EU. However, the uncertainty will continue even after the midterm elections," says IW foreign trade expert Samina Sultan.

Trump was unable to permanently reduce the US goods trade deficit. In August 2026, according to IW, this was 130 billion dollars - around 35 billion more than in August 2024. The EU share therefore fell from 20 to seven percent. But this is mainly due to the fact that the USA exports more goods, especially energy, to the EU. The USA's high trade deficit with Germany fell slightly: in August 2026 it was 5.8 billion dollars - after 6.6 billion two years earlier.

According to IW, foreign companies also invested less in the USA. Direct investments there amounted to $248 billion in 2025, 8.2 percent less than in the previous year. The US economy is growing robustly. But fewer new jobs are being created than under the previous government, and investments are heavily focused on AI.

Since taking office in January 2025, Trump has imposed tariffs on many countries. Washington reached an agreement with the EU on a trade agreement that is advantageous for the USA and sets a tariff cap of 15 percent on most imports from Europe.

In the US congressional elections on Tuesday (November 3rd), all 435 seats in the House of Representatives and 35 of the 100 Senate positions will be re-elected. According to polls, the Democrats could win the majority in the House of Representatives, while there is no clear picture emerging in the Senate.

But even if the Democrats form the majority in one or even both chambers in the future, a Trump veto would have to be overruled by two-thirds of the voting representatives in both chambers - this is extremely difficult to achieve in practice.