26 October 2026
US midterms: guardrails, not a U-turn
By René Buck, CEO BCI Global
On November 3, Americans elect a new Congress. If you are considering a plant, distribution center or R&D site in the United States, the question is not who wins. The question is: what changes in my business case? The short answer: less than the headlines suggest. But not nothing.
It is a question we have been hearing a lot lately. Should we wait until after the elections? It is an understandable reflex. Anyone who has followed US trade policy over the past eighteen months would rather not bet on the wrong horse again.
So we looked into it. Not on gut feeling, but through conversations with a large number of VPs of Manufacturing, Supply Chain and Corporate Development. Fully anonymous, and explicitly not about their political preferences. We asked about the economic and trade consequences. On top of that, we combined sources ranging from Bloomberg and the Financial Times to the Federal Reserve, UNCTAD and the European Commission. The result: directional judgments, not guarantees. But a lot better than guessing.
What is on the table?
All 435 seats in the House of Representatives and 35 of the 100 Senate seats. Republicans currently hold the majority in both chambers: 219 to 214 in the House (with two vacancies) and 53 to 47 in the Senate. That gives us four scenarios.
Pollsters are remarkably aligned. On October 18, Decision Desk HQ, Call the Map, Poliwave and Polymarket gave the Democrats a 77 to 91 percent chance of winning the House, and 56 to 65 percent for the Senate. Translated into four scenarios:
| Scenario | Probability (October 18) | In one sentence |
|---|---|---|
| 4 Democrats win the House and the Senate | 54–63% | More predictability, better relations with Europe, Canada and Mexico; tougher on China |
| 2 Democrats win the House, Republicans keep the Senate | 17–28% | More oversight of the White House, no rapid change of course |
| 1 Republicans keep the House and the Senate | 9–21% | Tariffs are written into law and remain beyond 2029 |
| 3 Republicans keep the House, Democrats win the Senate | 1–2% | In practice: status quo |
The most likely scenario, then, is a Democratic Congress. But a one-in-five chance that everything stays as it is, is too big to ignore. Anyone preparing an investment worth hundreds of millions plans for all four.
The starting point
The US economy is solid, but not booming. Inflation stands at 3.7 percent, unemployment at 4.2 percent. For the average American, affordability is the core issue of this election.
And then there are the tariffs. On February 20, the Supreme Court ruled 6 to 3 that the IEEPA, the International Emergency Economic Powers act on which the President based his import duties, does not authorize tariffs. Anyone who thought that would end the tariff story was in for a disappointment. First came a temporary 10 percent surcharge on all imports under Section 122. That lapsed on July 24. Since then, duties of 10 and 12.5 percent apply to 60 economies under Section 301 of the Trade Act, including the EU, the United Kingdom, Japan, China, Canada and Mexico. On August 3, 25 states went to court to block that as well. The case is still pending.
In short: the legal wrapping changes, the tariffs stay.
Growth and employment: watch the right variable
In all four scenarios, we expect no material change in economic growth or unemployment. Producer and consumer demand, AI investment, the oil price, automation and the Fed drive growth far more than the make-up of Congress.
A change in the congressional majority does not immediately create additional demand for a company’s products or make a constrained labor market easier to recruit in. Each project still needs a credible demand forecast and a location capable of supporting the intended operation. With whatever result, the labor market will not change in the short term.
Possible Midterm Elections Results and their Impact on Economy, Trade Relations and Investments in the US
Source: BCI Global, October 2026
Trade: the tariffs stay, the tone changes
The key conclusion first. In every scenario, the tariffs will very probably stay. The difference lies in the risk of escalation. The more influence the Democrats gain, the lower that risk.
Republicans win both chambers. Congress can then write the President's tariff powers into statute. The duties get a firmer legal foundation and will probably remain beyond 2029. The dispute with Canada may intensify further; USMCA talks have not even started.
Democrats win both chambers. Both chambers can then lift the tariffs on Canada, although the President keeps his veto. With Europe, the tone becomes more constructive, escalation risk drops and a solution for the 50 percent steel tariff is likely. Mexico gets more clarity on the requirements for regional trade. Note: more clarity does not automatically mean looser requirements or unrestricted access.
A split Congress. More battles, more hearings, more oversight of the White House. But no rapid reversal. With slim majorities, policy options are limited.
In most scenarios, Mexico takes the conciliatory route, hoping for a durable USMCA agreement in 2027. And if the House stays Republican, the Turnberry deal with its 15 percent ceiling remains in place for Europe.
One misconception should be cleared: the Democrats are not full-time free traders. For example, if they win the House, relations with China are more likely to get worse than better. Think tighter export controls, on chips for example, and limits on US investment in China and the other way around as well.
The US as an investment location
For American companies, our assessment leaves the overall attractiveness of investing in the United States broadly unchanged across the four scenarios. Individual projects can nevertheless face very different outcomes depending on their reliance on imported inputs, international customers.
For European companies, it is a different story. They have been weighing the same trade-off for months: on the one hand: producing in the US to avoid tariffs; on the other: political uncertainty. If the Democrats win the House, or both chambers, predictability wins out over uncertainty.
This would be an improvement in investment confidence even if tariff costs remained largely unchanged. A company can model a known cost and decide whether a project meets its return requirements. Repeated changes to that cost can delay approval, particularly when a new factory will operate for decades.
The calculation must cover the full production process. A US plant importing critical components can still incur significant tariff costs. Companies should compare the landed cost of finished goods with the complete cost of local production, including duties on inputs and the time required to develop local suppliers. Announcing a US investment does not, by itself, resolve exposure throughout the supply chain.
For Canadian and Mexican companies, the practical issue is the reliability of access to the US market. BCI expects the greatest potential improvement in relations if Democrats control both chambers. Mexico could benefit from greater clarity about regional trade requirements, even where those requirements remain demanding. Canada faces a higher deterioration risk under continued Republican control of Congress.
A North American footprint assessment should therefore test cross-border flows at product level. The sourcing of components and the applicable origin requirements can materially affect whether a Canadian or Mexican operation offers an advantage. A favorable labor cost comparison is only part of that calculation.
For Asian companies, the pressure to invest in the US continues in most scenarios; a deal between President Trump and President Xi cannot be ruled out. Under a Democratic Congress, predictability improves for Japan and Korea, while Chinese investment in the US is probably restricted further.
And then there is talent. If the Republicans keep both chambers, Congress will probably write the $100,000 fee on H-1B visas into law. If the Democrats win the House, they will at least block new restrictions.
For a new production facility, access to foreign specialists can determine how quickly equipment is installed and employees are trained. For an R&D center, it can affect the choice of location itself. Companies should assess recruitment and visa exposure early enough to incorporate realistic staffing assumptions into their implementation schedule.
What does this mean for your location decision?
The four scenarios provide a framework for testing a project. They should help management identify which changes would actually alter its location decision. The outcome on November 3 is no reason to put a well-founded investment on ice. The most likely scenario according to pollsters (i.e. Democrats winning both Chambers) brings guardrails, not a U-turn. It is, however, a good moment to take a hard look at your business case. Six points.
1. Treat tariffs as a given. They disappear in none of the scenarios. The old argument still stands: produce in the market, for the market.
2. Use scenario 1 (Republicans keep both Chambers) as a stress test. What if the tariffs become law and stay beyond 2029? If your business case cannot survive that, it is too thin.
3. Take a hard look at Canada and Mexico. If you serve North America from Mexico or Canada, prepare for the USMCA review in 2027. Count on clearer rules for regional trade, not on looser rules or unrestricted access.
4. Map your China exposure. If the Democrats win the House, things are more likely to get stricter than looser. That applies to chips, components and Chinese partners in your US supply chain.
5. Factor in talent. If your project depends on foreign specialists, the H-1B fee in scenario 1 is a serious risk. Build it in.
6. Define your tipping points in advance. At what tariff level, or after which political development, will you shift volume? Settle that now, and you will not have to decide in a panic later.
You cannot steer geopolitics. You can steer your footprint. The companies that came through the turbulence of recent years best were not the ones that predicted the future best. They were the ones prepared for several futures.
Be ready.
René Buck is founder and CEO of BCI Global, a worldwide operating manufacturing, supply chain and location strategy consulting firm. This article is based on the BCI Global analysis “Midterm Elections 2026: What the Results will Mean for US Trade & Investment”.
Email: rene.buck@bciglobal.com
