What can Trump do—and not do—with Congress in the hands of Democrats?

U.S. President Donald Trump faces an uphill battle with the Democratic Party set to take control of both chambers of Congress in January, following the midterm elections. Despite this, experts say much of what Trump has done so far will remain largely unaffected due to his continued power as president. Derek Holt, Scotiabank's vice president and head of Capital Markets Economics, noted that voters were "vindicated" in their opposition to Trump's policies during the midterms, citing issues like increased deficits, poor trade policies, and broken promises.

The three branches of the federal government in the U.S. are Congress, comprising the House of Representatives and the Senate, and the executive branch, with Trump at its helm. Republicans held majorities in both chambers until 2027, while Trump remains president. This divide between the two political forces will likely result in gridlock for the next two years, making it difficult for Trump to get his agenda passed.

A Democrat-controlled Congress will gain more power to launch investigations and issue subpoenas, potentially putting Trump in a more defensive position. The trade war initiated by Trump through executive orders will be challenging for Congress to reverse, as the power to set tariffs lies with the executive branch, not Congress. Canadian communities in Maine and Michigan voted against Trump's tariff policies, contributing to the Democratic victory in the midterms.

In the "lame duck" session, Trump and Republicans may attempt to pass as much legislation as possible before Democrats take control. A new trade deal with Canada, which could replace the current CUSMA, is the primary focus during this period. If a comprehensive agreement can be signed before the Democrats take over, it may help alleviate some of the negative economic impacts of the tariffs.