Tariff Pressure to Persist Despite Democrats’ Control of Both Chambers; Opportunities in Shipbuilding and Semiconductors

Pressure expected to continue, including Section 301 investigations and Section 232 tariffs

Efforts to limit tariff authority likely to be blocked by a presidential veto

Legislative discussions expected in shipbuilding, semiconductors, and power sectors

Although the Democratic Party won majorities in both chambers of the U.S. Congress in the midterm elections, the United States is expected to continue its trade pressure, with tariffs at the forefront. However, analysts say new opportunities may open up for Korean companies in areas where bipartisan cooperation is possible, such as shipbuilding, semiconductors, and power.

In the U.S. midterm elections held on Nov. 4 (local time), the Democratic Party secured 54 Senate seats and 228 House seats as of 7, becoming the majority party in both chambers. The party will take the lead on budget reviews and Senate confirmations in the 120th Congress, which begins in January next year. However, legislation on contentious bills is expected to face significant hurdles due to the presidential veto and the Senate filibuster.

Even after the U.S. Supreme Court ruled that the tariffs were unlawful, the U.S. administration has continued to impose tariffs under individual laws, including Section 301 of the Trade Act and Section 232 of the Trade Expansion Act. Even if Democrats pursue legislation to limit the president's authority to impose tariffs, it is likely to be blocked by a presidential veto. Trade pressure driven by tariffs is therefore expected to continue.

In particular, the range of products subject to tariffs under Section 232 is expanding from steel, aluminum, copper, automobiles, and auto parts to patented medicines, drones, and other goods. Attention is also focused on the results of a Section 301 investigation into “structural overcapacity,” which is underway in 16 economies, including South Korea.

The policy of countering China is also expected to continue, underpinned by bipartisan agreement. Although Democrats will lead budget reviews and oversight of the executive branch, the Republican filibuster in the Senate and the presidential veto remain potential obstacles. As a result, major policy shifts, such as contentious legislation on immigration and health insurance or restoring electric vehicle subsidies, are expected to be difficult.

Meanwhile, legislative discussions on support are expected to gain momentum in shipbuilding, semiconductors, and power, where the two parties share common ground. In shipbuilding, lawmakers from both parties jointly introduced the shipbuilding revitalization bill, the SHIPS for America Act. Key provisions, including subsidies for shipyard investment and an expanded requirement for government cargo to be transported on U.S. vessels, were included in the House version of the National Defense Authorization Act. Attention is focused on whether these provisions will be included in the defense authorization bill, which is expected to receive final approval at the end of the year.

In semiconductors, the factory investment tax credit, which both parties support extending, is set to expire at the end of this year, making its extension a key issue. Some discussions may take place on regulating data centers' use of power and water. However, the two parties agree on expanding the transmission grid, which is expected to benefit demand for power equipment.

Factory construction and power grid projects are also affected by state tax and permitting policies. With the political parties of the governors changing in states such as Georgia and Texas, where Korean companies have concentrated their investments, investment conditions could also shift from state to state.

Lee Geumha, head of KOTRA's North America Regional Headquarters, said, “Tariff policies will remain in place even though Democrats have taken control of both chambers of Congress, but opportunities may emerge for Korean companies entering the U.S. market in bipartisan areas such as shipbuilding, semiconductors, and power. We will closely monitor legislative developments in the United States and actively support Korean companies so they do not miss these opportunities.”

This content was produced with the assistance of AI translation services.