While we don’t have a crystal ball (it’s on our wish list), we’ve broken down how a change in power could affect business dynamics related to the war in Iran, tariffs, data centers and AI, healthcare affordability and permitting reform.

How could a Democratic Congress affect the war in Iran?

The Republican-led House had no luck compelling the president to end the War in Iran or require Congress’ sign-off to keep the war going, and a Democratic Congress won’t either.

If anything, the end of election season makes it easier for the president to keep the war going. He will no longer feel pressure to make the war go away, like the temptation to ease issues like high oil and gas prices to help Republicans in the midterms. Instead, Trump can continue to pressure Iran without an immediate deadline.

“The president, at this point, has little incentive to end the conflict under anything but very favorable circumstances for the United States, and it's not clear that Iran can continue two more years like the past six months,” said Mark Jones, political science fellow at Rice University’s Baker Institute. 

Why a Democratic Congress is unlikely to reverse Trump's tariffs

Democrats can't do much to change the direction of the president’s tariff strategy. Although Congress has constitutional authority over tariffs, it has delegated significant power to the president. To reverse that course, lawmakers would likely have to pass legislation the president is unlikely to sign. With their hands tied, Democrats may see a political advantage in letting the president continue pushing tariffs amid high inflation and supply chain issues, as the economic fallout could strengthen their case for changing presidential leadership in 2028. Congress can also influence how tariff revenue is spent, but its ability to directly change the administration's strategy remains limited.

Could divided government lead to stronger AI regulation?

Republicans are more apt to leave AI alone, while Democrats are more likely to call for AI regulation. But the issue matters to voters. Expect hearings and ideas about regulation going forward, with Democrats pushing uncomfortable legislation on Republicans, who are pinned between their constituents’ concerns about AI and the president’s stance that AI tech companies police themselves.  

It’s the kind of issue that could gain enough traction for Congress to override a presidential veto.

How congressional control could affect data center development

While Democrats are more likely to restrict data center development, states and local governments (rather than the federal government) handle regulation more directly. 

Healthcare affordability could create an opening for bipartisan legislation

With rising costs and affordability central concerns among voters, healthcare premiums are expected to climb again next year for employers and consumers. Democrats want to revisit health care, specifically through social programs such as expanding Medicare coverage.

While Republicans oppose expansions like Medicare for all, the chambers have an opportunity to thread the needle and develop modest health care affordability legislation with more populist appeal that the president could support.

Why energy permitting reform faces continued obstacles in Congress

Growing energy demands, driven largely by AI, have underscored the need to streamline federal permitting to make room for additional electrical infrastructure. Even in a Republican Congress with bipartisan support, lawmakers have been unable to advance meaningful permitting reform so far this term.

The problem is a PR one: reform would streamline projects like data centers, which are unpopular among voters (note, it could speed up clean energy projects, too). A bipartisan group of lawmakers is poised to hammer out reform details after the election in hopes of passing it before a new Congress is sworn in. Democrats are unlikely to prioritize major reform on their own, although they could pick some low-hanging fruit.  

How executives should prepare for a shift in congressional power

This may be a time to assess your governmental relationships. Executives accustomed to dealing with Republican leadership should make sure they have substantial relationships with potential Democratic committee chairs, said Rottinghaus.

Regardless of which party comes out on top in November, the closeness of elections moving forward highlights the necessity for business leaders to develop relationships across the aisle.

“That’s going to be the way it is for a while,” he said.