US Midterms Offer Asia Pacific Little Relief on Iran War and Tariffs

Governments and businesses across the Asia-Pacific are looking to the November 2026 US midterm elections for potential changes in Washington's foreign policy, trade restrictions and regional security commitments. However, analysts expect a Democratic victory in the House of Representatives, and possibly the Senate, to have limited influence on President Donald Trump's policies.

The region has experienced significant economic consequences from the US and Israel's war against Iran, particularly after disruptions to energy shipments through the Strait of Hormuz. Before the conflict began in January, Asia-Pacific countries received most of the Gulf oil and gas transported through the strategic waterway.

The Philippines, which obtains more than 90 percent of its crude oil imports from the Gulf, has remained under a national energy emergency since March. According to Singapore's ISEAS-Yusof Ishak Institute, rising fuel costs have also depleted foreign exchange reserves in Cambodia, Laos, Myanmar and East Timor. Indonesia, Malaysia, Thailand and Vietnam have spent heavily on fuel subsidies.

Steven Okun, chief executive of Singapore-based APAC Advisors and a trade specialist, described the elections as an important political event attracting attention across the region.

"Of course, everybody is watching," said Steven Okun, chief executive of APAC Advisors.

"It's great political theatre," said Okun.

Despite regional opposition to the Iran conflict, Okun expects limited congressional influence over the administration's military decisions. He said Democratic lawmakers could investigate the war and increase oversight but would face significant obstacles to changing its direction.

"With Iran, I don't see [a Democrat-controlled Congress] having much change at all, other than the fact that the war will be investigated and there will be oversight hearings," said Okun.

"We might even see an impeachment of the secretary of defence, but it doesn't change the overall impact of the war," said Okun.

Congress has constitutional authority to declare war, but Trump has characterized the attacks on Iran as self-defense. He has also disregarded congressional resolutions calling for US forces to withdraw from hostilities. Any legislation restricting military operations or funding could face a presidential veto, which requires a two-thirds majority in both chambers to override.

Trade policy presents another challenge for countries seeking relief. Trump's previous reciprocal tariffs affected approximately 90 countries, with rates ranging from 10 percent to 50 percent. Cambodia faced a 49 percent tariff, Laos 48 percent, Vietnam 46 percent and Myanmar 45 percent.

After the Supreme Court struck down those tariffs in February, the administration introduced alternative measures. In July, it imposed tariffs of 10 percent and 12.5 percent on goods from 60 trading partners over allegations involving imports produced with forced labor.

"In some ways, the new Congress is not going to matter to the Asia Pacific because it's not going to affect trade policy," said Okun.

"Congress cannot change that … Tariffs don't change. The war doesn't change," said Okun.

Stephen Olson, a visiting fellow at the ISEAS-Yusof Ishak Institute, identified a potential opportunity for trade policy changes if Republicans respond to significant electoral losses by challenging Trump's approach.

In a recent essay, Olson described a possible electoral outcome as a "strong rebuke of 'Trumpism'" that could encourage Republicans who support free trade and have been "intimidated into standing down during the Trump presidency."

Olson characterized this possibility as "a glimmer of hope" for Southeast Asian economies dependent on access to the US market. He also said a Democratic-controlled Congress could pursue exemptions that provide exporters with "a modicum of relief." However, he expects substantial changes to US trade policy to remain unlikely before the 2028 presidential election.

Joshua Kurlantzick, a senior fellow for Southeast Asia and South Asia at the Council on Foreign Relations, said regional expectations extend beyond economic policy to military security and US engagement.

"I think nearly all of Asia would like to see enormous changes, across many domains, during the rest of Trump's term," said Kurlantzick.

"But I think much of the region believes this will not happen," said Kurlantzick.

Kurlantzick said Asia-Pacific governments want greater predictability in economic relations and stronger American security commitments.

"More stability" in trade and tariff policy is among their priorities, according to Kurlantzick.

Regional governments "would like to feel more stable in security guarantees from the US," said Kurlantzick.

He also highlighted demands for a "more clear, obvious US presence" in the South China Sea and Taiwan Strait. China's territorial claims overlap with those of five Southeast Asian countries in the South China Sea, while Beijing considers Taiwan part of its territory.

Businesses will also monitor whether Republican electoral losses encourage greater congressional resistance to Trump's decisions.

Kurlantzick said companies in Asia would welcome "greater GOP willingness in Congress to stand up to Trump, along with Democrats, on issues important to companies in Asia," including tariffs, trade policy and arms sales.

He also identified "overall economic unpredictability" as a major concern for businesses operating across the region.

China is another area where analysts anticipate congressional action regardless of which party controls the new legislature. Okun expects lawmakers to advance tougher restrictions on China's access to advanced technology.

Two proposed measures include the Remote Access Security Act, which would extend export controls to remote access involving US goods, software and technology, and the Chip Security Act, which would require companies to verify that advanced artificial intelligence chips remain in authorized locations to prevent their diversion to foreign adversaries.