Midterm results reshape tariffs, reshoring and freight costs

By James Calloway

Seventy-four percent of voters called the Iran war a major issue in their vote, according to the U.S. Global Leadership Coalition. Gas and diesel prices dominated the campaign, with the war blamed for higher costs.

Democrats now hold comfortable majorities in both the House and Senate while President Trump remains in the White House. Trump has said he will become “Mr. Veto,” meaning he would block legislation advanced by Democrats, making gridlock the likely near-term outcome.

Can policy certainty release delayed factory spending?

Early 2025 interviews with 18 executives by the Reshoring Institute found manufacturers holding back capital investment and hiring because economic uncertainty and volatile tariffs made planning difficult. Many companies were doing little investing, building, hiring or reshoring.

Rosemary Coates argues: “A more predictable policy environment could give companies the confidence to invest, even if tariffs stay in place.”

Coates expects the new Congress to deliver a more stable economy, even if that stability comes from repeated stalemates with the White House. Significant pools of capital have waited for tariffs, trade disputes and the Iran war to stabilize or acquire a path toward resolution.

U.S. manufacturing hiring has remained flat since the beginning of 2025, according to the Bureau of Labor Statistics. More dependable cost assumptions could release that deferred spending, supporting new manufacturing facilities and job creation even if tariffs remain.

For shippers, predictable tariffs improve factory and sourcing plans. For carriers and forwarders, renewed manufacturing investment could translate into additional freight demand as domestic production expands.

Can Congress change Trump’s tariff regime?

Trump imposed various tariffs during the past two years through emergency powers and executive orders. Courts have declared most of those tariffs illegal, and importers are now receiving refunds of collected duties.

The Constitution places tariff and taxation authority with Congress, and the new House majority is likely to try to reclaim that responsibility. Trump could impose additional tariffs through new executive orders, but Coates expects congressional attention to shift the focus away from that route.

For importers, refunds and less tariff activity could reduce landed-cost uncertainty. Forwarders and carriers would still face a regime in which tariffs remain available as an executive tool, although the frequency of new measures may decline.

Trade and foreign policy will remain executive responsibilities, but congressional delegations are likely to travel to U.S. trading partners to rebuild relationships and reduce friction. Greater engagement could improve the operating environment for globally connected manufacturers.

What changes for Mexico and Canada?

The USMCA agreement was due for an update in July, but the Trump administration declined to sign the continuing proposal. Instead, it chose bilateral negotiations with Canada and Mexico, putting the cross-border agreement’s renewal at risk.

U.S. automakers have substantial investments in Mexico and a clear incentive to lobby Trump and Congress for favorable terms. Any settlement must therefore protect automotive production that crosses the Mexico-U.S. border, where tariff changes could quickly alter vehicle costs and supply-chain plans.

Canada faces different political pressure. Newly elected Democratic representatives and senators from Michigan, Minnesota, Ohio, Maine and New York are likely to press Trump to ease executive-order tariffs and reconcile the administration’s dispute with Ottawa.

For shippers serving those lanes, separate negotiations with Mexico and Canada raise the risk of inconsistent rules for the same North American production network. Automakers and their freight providers will need country-specific assumptions rather than one USMCA framework.

What is the Taiwan risk for semiconductor trade?

Trade with Taiwan, where most advanced semiconductors are fabricated, remains unresolved. U.S. support for Taiwan’s government complicates the relationship with China, while the White House appears to favor Beijing and its China policy remains unclear.

Congress has favored Taiwan over the past several years. The size and strength of both countries, together with deep U.S.-China market integration, make the direction difficult to predict, leaving semiconductor sourcing exposed to a policy shift without a settled timetable.

How could state data-center decisions affect factories?

Beginning in 2027, the United States will have 29 elected Democratic governors. Many of the newly elected governors have promised to slow or stop data-center construction until agreements address electricity demand, water consumption and noise pollution.

Manufacturing also uses large quantities of electricity and water. State-level pauses on data centers, combined with investment in power generation, water recycling and infrastructure, could free resources or improve services for both industries.

That creates a second industrial-policy contest alongside tariffs. New factories, data centers and their utility requirements will compete for the same power and water infrastructure, making state decisions relevant to manufacturers selecting production sites.

Will the Iran war change freight costs?

Gas and diesel prices were among the foremost election issues, and the war was blamed for increases in both. Congressional pressure to cut war funding could accelerate an end to the conflict and allow Middle East oil trade to resume.

Lower gas and diesel prices would reduce transportation costs for shippers, carriers and forwarders. Coates expects any relief to take time, warning it could be a year or more before lower prices reach freight operations.

The forward path is policy-led: steadier tariffs could release factory spending, pressure on Iran war funding could reopen Middle East oil trade, and lower diesel would eventually ease transportation costs. Mexico, Canada, Taiwan and state power-and-water decisions remain the main variables to watch.