On Tuesday, 3 November 2026, Americans will vote in one of the most consequential elections of Donald Trump’s second presidency. They will not be choosing a president. Instead, they will be deciding whether Trump retains the congressional majorities that have helped him advance his political and economic agenda, or whether the Democrats gain sufficient control of Congress to constrain his administration over the remaining two years of his term. For investors, businesses, and governments around the world, the elections will provide an important indication of the direction that American economic policymaking may take through 2029 and beyond. America’s leading election forecasters and prediction markets point towards significant Democratic gains, potentially handing the party control of both chambers of Congress. Yet there are dissenting arguments that Republicans could retain control. And even more interesting arguments that a Republican loss may just be the inflection point needed to secure an enduring conservative American economic and political settlement. For South Africa, the results will determine the degree to which Washington is able to continue to act as a catalyst for desperately needed reforms Pretoria must pursue if South Africa is to save its democracy by rebuilding its economy.

What Exactly are the Midterm Elections?

The United States (US) holds presidential elections every four years, but elections for Congress take place every two years. Those that occur halfway through a president’s term are known as the midterm elections. On 3 November, Americans will elect all 435 voting members of the House of Representatives, along with 35 of the 100 members of the Senate, including two special elections. A number of state governorships and other state and local positions will also be contested. The congressional elections matter most for the balance of national political power because Congress is the legislative branch of the federal government and exercises authority over taxation, federal spending, legislation, and the oversight of the executive.

Congress consists of two chambers with different responsibilities and electoral arrangements. The House of Representatives has 435 voting members, each serving a two-year term, meaning that the entire chamber is elected every two years. The Senate has 100 members, two from each state, who serve six-year terms, with approximately one-third of that chamber facing election every two years. The House plays a particularly important role in initiating taxation legislation, approving government spending legislation, and conducting investigations into the executive. The Senate shares legislative authority with the House but also holds important powers over the confirmation of presidential appointments, including federal judges, senior administration officials, and justices of the Supreme Court. For most major legislative proposals to become law, both chambers must approve the same legislation before it is submitted to the president for signature.

The chart below shows the current composition of Congress.

The chart below shows where Senate seats are being contested.

The significance of this arrangement is that winning the presidency does not give an American political party unrestricted authority to govern. The constitutional system deliberately divides political power between the executive and legislature, and between the two chambers of Congress. A president whose party controls both chambers is generally better positioned to pass legislation than one whose opponents control either chamber. The midterm elections therefore represent an important opportunity for American voters to change the balance of political power without changing the president.

Why the 2026 Midterms are Especially Important

Trump entered his second presidency in January 2025 with the Republican Party controlling the White House, the House of Representatives, and the Senate. This arrangement, known as unified government, has provided his administration with an important political advantage in advancing its legislative programme. Republicans hold 53 of the 100 Senate seats, while their majority in the House of Representatives is considerably narrower. That means relatively small changes in electoral support across a limited number of congressional districts could alter the balance of power in the House and fundamentally change the political circumstances under which Trump governs during the final two years of his presidency.

There are three broad outcomes to consider.

The first is that Republicans retain control of both chambers of Congress. This would preserve the most favourable legislative arrangement for Trump and allow his administration to continue pursuing its priorities on taxation, federal spending, deregulation, and other areas of domestic policy with the support of Republican congressional leadership. It would not guarantee that every proposal becomes law, because disagreements within the Republican Party and Senate voting rules can still constrain legislation. Nevertheless, retaining both chambers would give Trump considerably more room to manoeuvre than he would enjoy under divided government.

The second outcome is that Democrats win control of one chamber, most consequentially the House of Representatives, while Republicans retain the other. This would create divided government, in which the president must negotiate with political opponents to secure legislative approval. Major tax reforms, spending measures, and other legislative initiatives could become substantially more difficult to pass. A Democratic-controlled House would also be able to intensify congressional investigations into the administration, exercise greater oversight of executive agencies, and use control over parts of the legislative process to challenge the president’s priorities. Such an outcome would not prevent Trump from governing, but it would change the character of his presidency from one in which his party controls the legislative process to one in which compromise, confrontation, and political negotiation become more important.

The third outcome is that Democrats take control of both chambers. This would place considerably greater constraints on the administration’s legislative programme. Democrats would control the leadership and committees of both the House and Senate, while Senate control would also give them substantial influence over presidential appointments and judicial confirmations. Trump would retain the presidency, his constitutional executive powers, and the authority to veto legislation passed by Congress. He would also retain significant powers in foreign affairs and areas where existing legislation delegates authority to the executive. However, his ability to secure new legislation reflecting his administration’s priorities would become much more limited.

Why the Elections Matter for the American Economy

For investors, the central significance of the midterms is whether Donald Trump can consolidate an ambitious and, to date, highly successful programme of domestic economic reform. Since returning to the White House in January 2025, Trump has cut taxes, removed regulatory barriers to investment, expanded domestic energy production, and challenged the debilitating influence of racial preferences and climate-related mandates over government and corporate decision-making. Together, these measures seek to restore commercial merit, profitability, productivity, and private investment as the principal drivers of American economic growth.

The evidence of economic strength is increasingly difficult to ignore, even for Trump’s critics. Figures released on 29 October show that the American economy expanded at an annualised rate of 3.4% in the third quarter of 2026, accelerating from 2.2% in the preceding quarter. More revealingly, real final sales to private domestic purchasers, a measure of underlying private-sector demand, increased by 4.9%. Strong consumer spending and investment have sustained the expansion despite uncertainty surrounding tariffs, energy prices, and international conflicts.

Among the administration’s most consequential reforms are its tax cuts. Legislation signed by Trump in July 2025 made key provisions of the 2017 Tax Cuts and Jobs Act permanent, preserving lower individual income tax rates and introducing further incentives for business investment and capital expenditure. Beyond reducing tax liabilities, these measures provide businesses with greater certainty over the long-term returns on investment in factories, machinery, and technology. That certainty strengthens the case for committing capital in America rather than deploying it elsewhere. A Democratic-controlled Congress could obstruct further reforms, although reversing existing legislation would require overcoming Trump’s presidential veto.

Trump has also moved decisively against diversity, equity, and inclusion requirements, commonly known as DEI, removing racial preferences from federal programmes and contracting while challenging their use in education and business. The objective is to restore merit, competence, and performance as the basis for appointments and commercial decisions. The economic case is that organisations which allocate resources and select people according to ability rather than demographic characteristics are better positioned to improve productivity and compete internationally.

In energy policy, Trump has sought to dismantle restrictive elements of the previous administration’s climate agenda, expand American oil and natural gas production, and accelerate energy infrastructure development. These reforms matter particularly as the US seeks to strengthen manufacturing and maintain its lead in artificial intelligence (AI) and advanced computing, both of which require abundant, reliable, and competitively priced electricity. Removing regulatory obstacles and unnecessary compliance costs can make major industrial and technological investments more attractive.

This approach extends across the administration’s wider deregulation programme, which seeks to shorten the time and reduce the cost of developing infrastructure, expanding businesses, and bringing new productive capacity into operation. With substantial capital flowing into AI, data centres, electricity generation, and advanced manufacturing, the opportunity for productivity gains is considerable. A return to more restrictive regulation could increase costs, delay projects, and weaken America's competitive position.

The risk is that a Democratic takeover of Congress could stall further reforms just as the American economy is gathering momentum. While Trump would retain substantial executive authority, a hostile Congress could obstruct new tax and regulatory legislation, complicate investment planning, and slow the consolidation of his economic programme. The consequences would extend well beyond America, given the influence of US growth, investment, and economic policy on global markets.

What History Tells Us About Midterm Elections

American midterm elections have historically been difficult for the political party occupying the White House. One recurring pattern is that voters use these elections to express dissatisfaction with the incumbent administration, particularly where economic conditions, inflation, or political controversies have weakened the president’s standing. The result has frequently been a loss of seats for the president’s party, sometimes on a scale sufficient to change control of Congress. However, the historical pattern is not universal, and the two chambers can produce quite different outcomes.

In 1994, during Bill Clinton’s first presidency, Democrats lost 54 seats in the House of Representatives. In 2006, during George W Bush’s second term, Republicans lost 30 House seats. Barack Obama’s Democrats suffered an especially severe defeat in 2010, losing 63 House seats, before losing a further 13 in 2014. Trump experienced the same broad pattern during his first presidency in 2018, when Republicans lost 41 seats in the House but gained two seats in the Senate. More recently, Joe Biden’s Democrats lost nine House seats in 2022, a considerably smaller setback than many previous presidents had experienced.

There are important qualifications to these historical comparisons. George W Bush’s Republicans gained eight House seats in the 2002 midterms, demonstrating that the president’s party does not invariably lose ground. The Senate also operates under different electoral conditions because only a portion of its seats is contested at each midterm election, and the particular states involved can materially affect the result. Trump’s experience in 2018 is a useful illustration, with Republicans simultaneously losing control of the House while strengthening their position in the Senate. The historical evidence therefore establishes a general tendency for the president’s party to face electoral pressure at the midpoint of a presidency, rather than a reliable formula for forecasting the outcome.

What America’s Leading Election Forecasters Expect

The latest forecasts from some of America’s most established political forecasting organisations indicate that Democrats are strongly positioned to regain the House of Representatives, while the Senate remains more competitive. Democrats need a net gain of four Senate seats to obtain a majority, making the outcome of a relatively small number of closely contested states decisive. The leading forecasters use different approaches, ranging from statistical models that assign probabilities to election outcomes to expert assessments that classify individual congressional races according to the strength of each party’s prospects.

The forecasts point to two important conclusions. The first is that a Democratic takeover of the House is a consistently prominent outcome across the different forecasting approaches. The second is that the Senate remains less settled, with meaningful differences between the models.

What the Prediction Markets are Saying

A second way of assessing the electoral outlook is through prediction markets, where participants trade contracts whose value depends on the outcome of an election. Unlike conventional opinion polls, which measure the stated voting intentions of respondents, prediction markets aggregate the financial decisions of participants trading on their expectations of the result. A contract trading at a price equivalent to 70.0% of its payout value broadly implies that the market assigns the event a 70.0% probability of occurring. These prices are not guarantees of the eventual result, and they can be affected by market liquidity, trading behaviour, and changing expectations. Nevertheless, they provide a useful additional measure of how election prospects are being assessed.

The prediction markets therefore reinforce the broad findings of the conventional forecasting models.

The Dissenting Case for a Republican Victory

There is, however, a dissenting argument that Republicans could retain control of both chambers of Congress. It rests on five propositions.

The first is that opinion polls have underestimated Republican electoral support in Trump’s presidential campaigns and may be doing so again.

The second is that Republican gains from the redrawing of congressional boundaries could allow the party to retain control of the House even if Democrats win more votes nationally.

The third is that the Republicans’ existing 53-seat Senate majority gives them a considerable advantage, as Democrats must achieve a net gain of four seats to take control.

The fourth concerns turnout, with differences between registered-voter and likely-voter polling suggesting that Republican support in some competitive Senate races may be stronger than headline polling implies.

The fifth is that Republican fundraising and campaign resources could prove decisive in closely contested congressional districts.

These arguments do not overturn the prevailing Democratic forecasts, but they identify the conditions under which the election could produce a substantially different outcome. This really goes to a question of whether the Democratic polling advantage accurately represents the electorate that will turn out on 3 November and whether it is sufficiently widespread to overcome the Republicans’ advantages in the distribution of congressional seats.

The difficulty for the Republican argument is that these conditions would need to come together in sufficient numbers of competitive districts and states.

Could a Loss for Trump be in the Best Long-Term Interests of the Republican Party?

There is a further argument emerging within Republican circles that a loss of both chambers of Congress, while damaging to Donald Trump’s immediate political authority, could ultimately accelerate a necessary realignment of the Republican Party ahead of the 2028 presidential election. The argument is that Trump’s economic reforms have established a valuable foundation for American prosperity, but that some of the more contentious elements of his political style, tariff policies, and foreign interventions have undermined the broader electoral appeal of the Republican Party. A substantial defeat in November could be interpreted as a rejection of these aspects of what might be called Trump-MAGA politics (as opposed to MAGA politics in their entirety), rather than of the underlying conservative principles of lower taxation, smaller government, stronger property rights, merit, and economic freedom. Such an outcome could create an opening for Republicans seeking to preserve the administration’s economic achievements while rebuilding a broader conservative coalition capable of winning the presidency in 2028.

There is already evidence of tension between loyalty to Trump and the electoral calculations of Republican candidates. Scores of Republican candidates have begun to distance themselves from Trump on particular policies and reduced the prominence of their association with him. A distinction is therefore developing between support for the administration’s broader conservative objectives and concern about the electoral consequences of some of Trump’s decisions. A defeat could intensify that debate and bring forward the question of what Republican conservatism should look like after Trump leaves office.

The emergence of Marco Rubio as a possible contender for the Republican presidential nomination in 2028 is relevant to this argument. Rubio combines participation in the Trump administration with a political background more closely associated with traditional Republican conservatism. His experience in the Senate, his emphasis on American strategic interests, and his role as Secretary of State could provide the basis for a political appeal that seeks to retain elements of Trump’s agenda while adopting a different governing style.

The political calculation around these midterms is therefore more complicated than whether a Republican defeat would weaken Trump. The more consequential question is what would replace his personal dominance of the party and whether Republican leaders could distinguish between those aspects of his presidency that have strengthened the American economy and those that have generated wider political resistance.

As the results emerge on Tuesday night, 3 November, a thing to watch therefore will be the line between an electoral setback that constrains Trump’s more controversial initiatives while leaving much of his domestic economic programme intact, and a defeat that fundamentally alters the political conditions under which that programme can continue.

Why the Elections Matter to the World

The significance of the midterms extends well beyond the US because American economic performance and policymaking influence the direction of the global economy. The US remains the world’s largest economy, the dollar is central to international trade and finance, and American Treasury securities provide the benchmark for interest rates across global capital markets. With the American economy already demonstrating considerable strength, the political environment that emerges from the elections could have important consequences for global investment, trade, energy prices, and economic growth.

Counterintuitively, a Democratic victory in one or both chambers of Congress could prove positive for the global economy, provided it does not fundamentally undermine the Trump administration’s broader domestic economic reform programme. While a Democratic Congress could obstruct further tax cuts and deregulation, it could also exert pressure on the administration to moderate its tariff policies and pursue more predictable international trade arrangements. Trump’s tariffs have introduced costs and uncertainty into global commerce. A more measured approach to tariffs, particularly one that preserves the administration’s broader objective of securing better trading arrangements for the US, could remove significant friction from the global economy. Greater certainty over market access, supply chains, and the future costs of international trade would strengthen the environment for business investment, potentially allowing the American economy to build on its existing momentum.

A Democratic victory would increase political pressure on Trump to bring the American conflict with Iran to an end, while also providing him with a political justification for pursuing such a settlement. The conflict has contributed to elevated global energy prices and uncertainty over the security of oil supplies through the Persian Gulf. A credible agreement that ended hostilities and restored confidence in the free movement of energy supplies could bring substantial relief to oil markets, reduce transport and production costs, and ease inflationary pressures across the global economy.

More significantly, as The Common Sense has previously argued, a settlement with Iran could form part of a much broader geopolitical bargain involving the US, China, and Russia. Rather than treating the Middle East conflict, the war in Ukraine, and tensions over Taiwan as entirely separate crises, this newspaper has shown how a pending US/Russia/China summit may be an opportunity to bring the war in Europe to an end, reduced the prospect of military confrontation over Taiwan, and establish a more stable security arrangement in the Middle East. Democrats would oppose the Taiwan and Ukraine options which Trump may simply have to bludgeon his way through with executive action, but the Iran settlement is a necessary step towards the broader three-way deal. Such a deal would, of course, be extraordinarily difficult to negotiate. Nevertheless, its potential to reduce geopolitical risk, improve confidence in global supply chains, ease pressure on energy markets, and encourage capital to move towards productive investment is significant and would induce very positive market sentiment, forcing a lift in global growth forecasts.

Implications for South Africa

For South Africa, however, the implications of the midterms extend beyond American economic growth, interest rates, and international capital flows. One of the most positive developments for South Africa’s long-term economic prospects has been the pressure brought to bear by the Trump administration on Pretoria over its domestic economic policies and foreign policy direction. Washington has challenged South Africa’s race-based empowerment requirements, raised concerns about the lack of security of private property rights, and confronted Pretoria over foreign policy positions quite at odds with South Africa’s national interest. These interventions address arguably the three most important obstacles to South Africa becoming a competitive and successful emerging market economy.

The significance of the midterms for South Africa is therefore whether Trump retains the political authority necessary to sustain and intensify that pressure. For years, South Africa’s political establishment has resisted fundamental economic reform despite weak growth, extraordinarily high unemployment, and declining international competitiveness. A substantial weakening of Trump’s political authority after the midterms could reduce the effectiveness of this pressure, even though he would retain considerable executive powers over trade and foreign affairs. Such an outcome would be a setback for South Africa’s reform prospects, removing or weakening one of the most important external sources of pressure on Pretoria to change course. For South African investors, businesses, and households, there is therefore a strong economic interest in Washington maintaining its pressure on Pretoria.

Wrapping This up

The most important question as the election results emerge may therefore be whether Trump is weakened sufficiently to moderate the less productive elements of his presidency, without undermining the economic reforms that have accompanied America’s strong growth, and whether Republicans can use the political consequences of the midterms to build a durable conservative alternative capable of retaining the White House in 2028. A Democratic victory would not, counterintuitively, be wholly at odds with this. For South Africa, the most important consequence will be whether Trump’s authority is sufficiently preserved to keep the pressure on Pretoria over empowerment, property rights, and foreign policy, given the importance of this to the advancement of the long-overdue economic reforms that South Africa needs if it is to stage an economic recovery and thereby secure the future of its democracy. The most consequential outcome would therefore be one that preserves the momentum of American economic growth, creates greater international stability, maintains pressure for reform in South Africa, and lays the foundations for an enduring American conservative political and economic settlement.