Democrats achieved a stunning victory in the congressional elections, transferring control of the US legislative body to their hands. This has seriously undermined the outlook for the final two years of Donald Trump's term, and the outcome was closely monitored this week by cabinets of ministers, diplomats and the Australian defence industrial sector.
According to observers' assessments, the Democratic victory should expand the Australian alliance with the United States. A new base of power is emerging in Washington that affects Aukus, data centre development and relations with China. Analysts highlight that public anger over the rising cost of living, particularly fuel prices, and the impact of data centres are two factors in the election results that carry warnings for the Australian government.
Bruce Wolpe, a senior fellow at the Centre for US Studies, said that the cost of living undermined Trump's ability to rouse voters. He also said that the Albanese government is suffering a blow due to the economic consequences of the war in Iran. "I think many are asking what that [Australian] government is doing?", Wolpe said. "Have they lost control of the economy?" He added: "In January, before the war in Iran, the outlook was quite good. But now, after the budget process and the war... people are simply very uncertain where this will end up." He also noted: "This is not a problem that can be solved immediately and people really do not like that."
Elliot Clarke, head of international economics at Westpac, assessed that the election results have "dramatically changed" the outlook for the war in Iran, which could affect the economy in Australia. "It has changed the atmosphere around the Middle East conflict", Clarke said. "It is good news." The global oil price fell sharply as election results came in. The Brent crude benchmark, which had threatened to exceed its April peak, instead fell by 20 per cent. According to Clarke, greater confidence in a possible resolution in the Middle East would help curb inflation and allow central banks to refrain from raising interest rates. "That definitely changes the calculus", he said.
Andrew Hastie, a member of the opposition leadership, told 2GB that the results showed that economic communication is key. "People feel worse off after the tariffs and after the war in Iran, and Donald Trump has said several times that he actually does not care", Hastie said. He added: "Our job is always to ensure better outcomes for the Australian people."
Arthur Sinodinos, former ambassador to Washington, assessed that the change on Capitol Hill is an opportunity for Australian officials to advance political goals with both US parties and to consider the relationship beyond the 2028 presidential elections. "The main question is: what is the impact on geopolitics around the world?", Sinodinos said. "Does it bring more uncertainty to US foreign policy? We have already had a lot of volatility in that regard." He also said that Congress could exert greater pressure on the administration to support Ukraine and pass measures including funding for munitions for Ukraine. "I think the Chinese will feel more emboldened, but I do not think that translates into some sudden action towards Taiwan. Trump has made it clear in the past that they will not do anything while he is in office and I think he would feel obliged to act if they did", he said. Sinodinos praised the professional approach of Prime Minister Anthony Albanese in dealing with the often unconventional US president. "I think the Australian government's reaction after this vote will be to continue working with the administration, keep their heads down", he said.
Trump claimed that Republicans did poorly because he was not on the ballot, although he had repeatedly urged voters to pretend he was. Vice President JD Vance called Trump's war in Iran an "obvious scapegoat". Ed Husic, former minister for industry, wants a radical change in the alliance. "The moment to reset relations with the Trump administration is right now", Husic said. "A completely different Congress will require that administration to act differently, including not harming allies – friends like Australia – with tariffs."
Abe Denmark, a partner at The Asia Group and architect of the Aukus agreement in the Biden administration, warned against over-interpreting the results for Australia. "What will change is the way power is distributed in Washington", Denmark said. "There will now be new centres of power with which to engage: Democratic chairs who control authorisations and budget funds, Republicans more ready to diverge, and 2028 candidates from both parties who want to stand out." He added: "While this gives Australia more points of engagement, it also creates more noise. The challenge for Canberra, as for all allies and partners, will be to distinguish political positioning from permanent policy." Denmark also said that Democrats might take a different stance from Trump.
