On 3 November, Democrats won control of both the House and the Senate. The new majorities will take office in January 2027. With President Trump remaining in the White House, the United States will have a divided government. Congress will gain more power to review decisions, shape negotiations and slow policy changes. However, it can do little to change the overall direction of trade policy. Current tariffs are expected to remain, and the President will continue to have significant executive authority. The main changes will be greater congressional oversight, increased uncertainty around federal decision-making and a larger role for state-level policy.
To learn more about these recent developments, join Business Sweden’s Roadshow USA 2026, taking place in seven cities across Sweden. From 16 to 20 November, the team will share insights into US politics and support for your US market journey.
A new balance of power
Democrats flipped at least seven Senate seats, including Republican strongholds such as Kansas and Texas. Democrats will hold a clear Senate majority. In the House, they are projected to win around 258 seats, giving them a comfortable majority. Economic concerns and broader dissatisfaction with the administration contributed to the result. The outcome also sets the stage for the 2028 presidential election, when the direction of US policy could change more fundamentally.
Control of both chambers gives Democrats three main levers:
- Oversight. Committee chairs can hold hearings, issue subpoenas and launch investigations into tariff decisions, trade deals and military operations, including the conflict with Iran.
- The budget. Congress controls government funding and the debt ceiling. Current funding expires on 11 December, and from January both become important sources of leverage for Democrats in negotiations with the White House. This raises the risk of standoffs and shutdowns, which can delay permits, inspections, grants and public contracts.
- Confirmations. The Senate can block or delay the confirmation of cabinet officials, judges, ambassadors and regulators, potentially slowing appointments and implementation across federal agencies.
Democratic priorities are emerging around energy, data centres, affordability and healthcare, but concrete policy proposals are still taking shape. Democrats lack the votes to override a presidential veto, limiting their ability to reverse policies driven by executive authority, including tariffs and energy policy. Congress can increase scrutiny and use budget leverage, but significant authority remains with the president. For Swedish companies, this means continued tariffs and trade-policy continuity, but greater federal uncertainty and an increasingly important role for state-level policy.
Trade and tariffs: continuity, but more scrutiny
Tariffs under Sections 232, 301 and 338 rest on executive authority. They are expected to remain central to US trade policy for the remainder of this administration. Congress can pass bills to limit them, but these are likely to be vetoed. What will change is the level of scrutiny. Hearings will put the administration’s tariff and trade decisions under review. Pressure on China-linked supply chains, transshipment and rules of origin has support from both parties and is unlikely to ease.
Swedish companies should keep tariffs in their base case, stress-test customs exposure, origin and landed costs, and document their supply chains well for US Customs and Border Protection (CBP) reviews and US customers.
Defence and security remain areas of bipartisan cooperation
Support for a strong defence and for US allies extends across both parties. The annual defence authorisation bill has passed every year for more than six decades. Democrats may scrutinise the Iran war and specific spending decisions. However, the broader focus on defence capability, resilient supply chains and reduced strategic dependencies is likely to continue.
The main risk is timing. If budget talks stall and Congress relies on short-term funding, new programmes and contract awards could be delayed. For Swedish defence and security companies, the underlying market opportunity remains strong. However, companies should plan for procurement delays and stay close to US partners and end users, and pay close attention to domestic production requirements in focus.
Federal uncertainty makes states more important for energy and industrial policy
Major new federal clean-energy legislation is unlikely under divided government, as new legislation could still face a presidential veto. At the same time, Democrats will use hearings and funding bills to push back against the administration’s energy priorities. Federal policy remains uncertain, but bipartisan action is possible.
As a result, states will become even more important. Democrats also flipped several governorships, including in Texas, Georgia, Nevada, Ohio and Iowa, which could shift state priorities on incentives and permitting. For manufacturing, energy and infrastructure investments, state incentives, permitting regimes and local politics will increasingly determine competitiveness.
The key uncertainty going into 2027
The main open question is how Congress and the White House will work together. Selective collaboration remains possible on shared priorities such as defence, China and must-pass funding bills. At the same time, a more confrontational relationship could bring funding standoffs, investigations and blocked nominees, pushing the administration to rely even more heavily on executive action.
The 11 December funding deadline and the first committee hearings in January will provide early indications of which path Washington is taking.
What Swedish companies should do
- Do not build 2027 plans around tariff relief
Continue to stress-test tariffs, customs exposure, origin and landed costs. - Identify where your business depends on federal decisions
Permits, grants, contracts and regulatory approvals may face greater uncertainty if budget negotiations become contentious. - Double down on bipartisan value propositions
US jobs, investment, resilient supply chains, national security, competitiveness and reduced strategic dependencies remain strong arguments regardless of who controls Congress. - Look beyond Washington
Review state incentives, permitting and site-selection programmes for planned US investments, especially in states with new leadership.
Business Sweden can help you act on these priorities. Support includes tariff scenario analysis to assess cost exposure, supplier evaluations to strengthen supply chains and localisation strategies. To discuss support for your business, please contact Johan Karlberg or Felicia Stéen.
To broaden support, Business Sweden launched the US–Sweden Tariff Intelligence and Advisory together with the Swedish Embassy in the US in 2025. The platform includes:
- Tracking tariff updates and providing implementation tools
- Enabling peer learning through virtual sessions and expert-led seminars
- Connecting you with vetted customs brokers and third-party logistics partners
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