"Trump-Congress Clash Spells Turmoil!... Democrats Face Tough Road to Next Election" [Economic Policy Zoom-In]

Factional Democratic Party faces urgent need for unity and solutions to everyday concerns

Trump likely to keep fighting and seek to deliver results

Results likely to come in foreign and security affairs, including the Iran and Russia-Ukraine

East Asia Institute President Jeon Jaeseong is being interviewed by The Asia Business Daily at the institute's office in Jongno-gu, Seoul. Photo by Jo Yongjun.

“The Democrats won a landslide victory in the U.S. midterm elections. They will revise some of Trump’s policies and investigate corruption in the Trump family, but fighting between the Trump Administration and the Democrat-controlled Congress could create an extremely chaotic situation for the next one to two years. The Democratic Party is broadly divided into four factions, each with a range of agendas. If the party fails to manage those agendas effectively and address the livelihood issues that have angered voters with Trump, thereby establishing itself as an alternative political force, it may struggle to win the 2028 presidential election.”

Jeon Jaeseong, president of the East Asia Institute (EAI) and a professor in Seoul National University’s Department of Political Science and International Relations, who specializes in international politics, including U.S. politics, said this in assessing the election results and prospects. “From Trump’s perspective, his goal will be to portray the Democrats’ corruption allegations as political persecution, rally the MAGA (Make America Great Again) movement and Republican supporters to fight back, and somehow demonstrate achievements for the remainder of his term so that a loyalist can become the Republican Party’s next presidential nominee,” he said.

The prevailing view is that Trump will focus on foreign and security policy to demonstrate results, given that he has lost control of both the Senate and the House. Attention is therefore also focused on what will happen with the Iran war and the Russia-Ukraine war, both of which have had a major impact on the global economy.

Regarding the Iran war, Jeon said, “It would count as an achievement for Trump if Iran’s military capabilities were weakened, negotiations were held to prevent it from developing nuclear weapons, and a highly favorable compromise could be reached over the Strait of Hormuz.” He added, “The situation will move toward negotiations to end the war, but the previous proposed compromise gave Iran too much, so it did not work. The United States could launch another military operation to gain leverage in negotiations, but if Iran holds out, Trump will face a dilemma.”

On Russia’s hybrid threats against European countries—various forms of intimidation that have not escalated into war—Jeon explained, “What Putin can do is reach a compromise with Trump to cut off aid to Ukraine, then harass European countries to show them how much helping Ukraine costs them. Meanwhile, he is waiting for far-right forces opposed to aid for Ukraine to come to power in Germany, France and the United Kingdom.”

On recent South Korea-U.S. relations and wartime operational control, Jeon said, “This is a very important moment when the United States is recalibrating its role in and perspective on its alliances. We should first define our relationship with the United States and our relationship with China in East Asia, and then consider what to do about our alliance. But judging the alliance based on the various issues that arose in the past, such as autonomy or inter-Korean relations, is itself a major problem.”

-How would you briefly assess the results of this U.S. midterm election?

▲The Democrats won a landslide, capturing both the Senate and the House. But what that means is that the anti-Trump coalition was much stronger. The Democrats did not run on a consistent policy alternative. If we ask whether this was a defeat for the Republican Party or a defeat for Trump, it should be seen as a defeat for Trump, because the backlash against his Iran policy, tariffs and excessively harsh immigration policies was strong.

-Isn’t it difficult for the Democrats to speak with one voice, given that the party includes democratic socialists as well as Christians, many of whom ran in this election?

▲I think so. The Democrats used to represent workers, but those workers have all moved over to the Republican Party. The Democrats have become a party for the well-off—people in the middle class and those working in IT (information technology) and finance—and have failed to represent workers’ interests. In other words, they moved toward the progressive cultural politics of “wokeness.”

There were two notable features of this election. The candidates were much younger, bringing in a lot of new energy, and they came from more diverse professional backgrounds than traditional politics, including pastors, a former Paralympian and Muslims. The average age of newly elected Democratic senators is 53. That is considerably lower than the average age of around 65 among current Democratic senators. Texas Senate candidate Talarico is 37, and Georgia Senator Ossoff is 39.

The problem is that it is difficult to view the Democrats as a single group in terms of political orientation, particularly on foreign policy. People say there are at least four groups: left-wing democratic socialists, traditional Democratic internationalists, restraint advocates who favor greater caution about foreign intervention, and moderate social democrats. Democratic socialists oppose foreign intervention, which means they are actually closer to the MAGA movement on that issue. The different factions within the Democratic Party have different agendas, so they can speak with one voice against Trump. But discussion has only just begun about whether they can become a new party capable of managing their other agendas effectively.

-In our interview last April, you said of the Iran war, “When President Trump’s complete failure hits rock bottom, a period of grand strategic realignment will emerge in the United States. What really matters is the Republican Party. If Republican lawmakers realize, starting with this midterm election, that they can only win by distancing themselves from President Trump—and if that happens—I think it will be the most decisive indicator.” Can we say that has now become reality?

▲I think so. The question in assessing this midterm election is whether it was a rejection of the Republican Party or of Trump, and Vice President Vance symbolically demonstrated that. He said the party lost the election because of the Iran war. It was not a rejection of the Republican Party’s platform. But Republican lawmakers will likely assess in various ways whether distancing themselves from Trump will help them win reelection. It is still too early to tell.

In a typical two-party system, electoral strategy comes down to whether to turn out your base or broaden your appeal toward the center. Republican establishment figures, the so-called internationalists, had prioritized their relationship with Trump because he could unite the MAGA base, which had been so powerful. But if the MAGA movement’s numbers shrink and centrists all turn against Trump, the Republican Party will consider expanding toward the center. Vance’s position, however, is still unclear. His views also differ from those of the Republican establishment.

-If Republicans make further progress in distancing themselves from Trump, could he be impeached?

▲The Democrats can introduce articles of impeachment because they have a majority in the House. But 67 votes are needed in the Senate, where there are currently 54 seats, or 56 at most, and more than 10 Republicans would have to support impeachment. That is unlikely. Republicans could support impeachment only if they believed they could regain power afterward. The vice president would take over and serve out the remainder of the term, so there would have to be a scenario in which the Republicans could regain the presidency in the 2028 election and retake control of the Senate or the House. They would have to believe that a post-impeachment administration led by the vice president would give them a better chance of retaining power than Trump would.

-The corruption involving the Trump family seems serious. There’s a word for it: “kleptocracy.” It comes from combining the Greek words for “thief” and “political system,” and is a compound of “kleptomania” and “democracy.”

▲Representative Garcia is a leading candidate to become the next chair of the House Oversight Committee, and has long said he plans to investigate the Trump family’s business dealings and the administration’s operations. In exit polls, around 60% to 70% of Americans said the U.S. government was corrupt. The corruption issue falls into two categories: conflicts of interest and illegal conduct. Trump’s son-in-law, Kushner, held no official position but acted as a special envoy in national negotiations. If he used that role for personal gain, that would be a conflict of interest. Even if no law was broken, it could be a target of political criticism, but proving and establishing that it was illegal would not be easy. If the administration refuses or delays submitting documents, an investigation could take more than a year. By then, it could run right up to the 2028 election.

However, I think Trump has a considerable plan to portray the investigation as persecution and use it politically. He appointed hard-liner Stephen Miller as chief of staff and told the attorney general to investigate Democratic lawmakers who plan to investigate the Trump family for making threats. The administration and Congress are engaged in a fight in which they try to discredit each other’s critics. In that situation, Trump will likely see an opportunity to use the episode as an example of political persecution, regardless of who is right or wrong, and reunite the MAGA movement and rally Republican supporters. If the Democrats overreach, a year could easily pass while they fight instead of exposing corruption in the Trump family.

-The next one to two years could be extremely chaotic for the United States.

▲That is highly likely. The challenge for the Democrats will be to get their internal affairs in order, as I mentioned, and establish themselves as a prepared political force for the November 2028 presidential election. In this midterm election, 15% of voters who had previously supported the Republicans switched to the Democrats. Many people in their 20s and 30s, Hispanics, Asians, and Black and white voters with a high school education or less also switched.

-White voters with a high school education or less were a key part of Trump’s support base.

▲They switched not because they liked the Democrats, but because they were disappointed that Trump had failed to address affordability—in other words, the cost of living and gas prices. The Democrats will have legislative power for the next two years and will do something with it. But if they fail to establish themselves as an alternative political force, they may struggle to win the 2028 election.

-What will happen to the MAGA movement? Will it split or weaken, or will it rally behind Trump as he plays the victim?

▲It is hard to say. There is a conservative group called Turning Point USA, founded by the assassinated Charlie Kirk, that has a major influence on conservatives in their 20s. It is now led by Kirk’s wife, Erika Kirk, who has publicly declared her support for Vance. Young people in the MAGA movement are rallying again because the Democrats will carry out a lot of persecution, but it seems that even within the movement there is no consensus about this. From Trump’s perspective, his goal will be to demonstrate achievements for the remainder of his term and make a loyalist the Republican Party’s next presidential nominee. Trump has no choice but to keep working to strengthen the MAGA movement and the Republican Party.

-Many expect that, after losing both the Senate and the House, Trump will be unable to make headway on domestic issues and will focus on foreign and security policy to demonstrate results. Could the Iran war end?

▲Trump acknowledged that the Iran war was the issue behind this election, but said he did not regret the war. It depends on how he defines the war’s objectives. If Iran’s military capabilities have been weakened, negotiations are underway to prevent it from developing nuclear weapons, and a highly favorable compromise can be reached over the Strait of Hormuz, Trump can claim he was right. The issue is how to exert pressure on Iran. A hard-line approach is an almost unanimous position within the Republican Party, so the key question is whether Trump can deliver on it. In Ukraine’s case, ending the war early through a compromise with Russia would also count as an achievement.

-So the Iran war will inevitably move toward an end to the fighting and negotiations.

▲Yes. But we should assume that a complete victory in the war is impossible. If it ends now, Trump cannot declare victory. The key questions are what steps to take in the Strait of Hormuz afterward and how to resolve Iran’s nuclear issue. Since negotiations are underway through Qatari mediation, whether to carry out as many military operations as necessary is also a crucial question.

Jeon Jaesung, president of the East Asia Institute, is being interviewed by The Asia Business Daily at the institute's office in Jongno-gu, Seoul. Photo by Jo Yongjun

-Looking at the situation in Europe, there have been false reports of explosives planted at European airports, drones appearing near airports, fighter jets and military aircraft entering or approaching airspace, damage to undersea telecommunications and power cables, arson attacks on railways, power infrastructure and industrial facilities, and cyberattacks. The perpetrators have not been identified, but Russia is suspected. These hybrid threats harass Europe without triggering a direct conflict.

▲Putin wants to win the war, but it does not seem likely that he can. Yet ending it now would destabilize his government, so he has every incentive to continue the war. From Putin’s perspective, he would like to end it on favorable terms while Trump is president. If the Democrats win the 2028 U.S. election, the United States could resume its support for Ukraine.

What Putin can do is reach a compromise with Trump to cut off aid to Ukraine, then harass European countries to show them how much helping Ukraine costs them. Meanwhile, he is waiting for far-right forces opposed to aid for Ukraine to come to power in Germany, France and the United Kingdom. France’s next presidential election is in April or May next year. The far right not only calls for ending aid to Ukraine, but sometimes even advocates leaving the European Union (EU). The question is how united European countries can be. I thought they were fairly well united, but now their economies are in serious trouble and they also face fiscal problems.

-Wouldn’t the effort collapse if just one major country withdrew its support for Ukraine?

▲Germany and France are the main pillars of the EU. If a far-right government came to power in either country and turned away from the EU, the situation would become extremely difficult. But in the long run, the EU’s economy is 10 times the size of Russia’s, and its defense spending is perhaps three times as large. If the EU stays united, it can stand up to Russia, and it also has nuclear weapons. Even if the United States significantly reduces its military presence, Europe has the capacity to defend itself. There are major internationalist factions in both the U.S. Republican and Democratic parties, and they too want to support Ukraine.

-What will happen with tariffs? Economic theory holds that tariffs are passed through to import prices and drive up consumer prices.

▲Even if courts rule that the tariffs are unconstitutional, the administration has so many legal grounds on which to act that people seem to think Trump will continue imposing them. Rather than curbing imports and protecting the market, tariffs have been used as leverage to attract investment. Consumers may bear the cost of tariffs, but tariffs have served as a tool. The benefits and costs of tariffs also vary by state and industry. New Hampshire and Maine, which are close to Canada, reportedly saw imports fall by 8% after steep tariffs were imposed on Canada. Nearly all the candidates elected in those states in this election were Democrats. Tariffs helped keep out Chinese products in the auto industry. Even if the Democrats take power, protectionism will continue to intensify, although there may be some adjustments to how tariffs are used.

And from a political scientist’s perspective, free trade does not really exist; the question is whether trade is more or less free. The World Trade Organization (WTO) also has exceptions for developing countries. The free-trade system is, in fact, a system in which political compromise leaves room for free trade while allowing countries autonomy over other policies, so that the system can be sustained politically. The system is less liberal now, but that does not mean the consensus has to break down.

-In any case, Europe is also in such a difficult position that it is raising barriers against China. Isn’t the issue China’s state subsidies and unfair trade practices?

▲But if you listen to the Chinese side, there are different views on where China’s overcapacity comes from. It is partly due to the government-led growth policy, but some argue that a much larger part of it recently comes from China’s own efforts—in other words, its high productivity, innovation and technological capabilities. Domestic demand and the property market are in such bad shape that there is almost no domestic demand left to absorb the excess supply. Still, even if China is highly competitive, it will be difficult to resolve global economic imbalances unless it exercises restraint, and the current situation cannot continue. China also needs to make adjustments.

-So ultimately, shouldn’t the exchange rate adjust? As China’s competitiveness increases, its excessive current account surplus should lead to an appreciation of the yuan and correct the imbalance, but that is not happening. This has led to calls for globalization without China—in other words, for every country to raise trade barriers against China to encourage the yuan to appreciate.

▲The reason China is not allowing the yuan to appreciate seems ultimately to be the U.S.-China rivalry. Those managing China’s economy believe that even if domestic demand suffers and it cannot sell to Europe, it must secure the economic strength to stay competitive against the United States. So strategic priorities such as domestic demand and reaching compromises with Europe are being pushed aside because the strategic focus is so heavily on the U.S.-China competition.

-Because economic strength matters in the U.S.-China rivalry, China is holding out against yuan appreciation and continuing to earn a lot of money?

▲The aim is to earn as much as possible, export to the developing world as well, and invest the money in military capabilities and AI development to beat the United States in their competition. That is why China is making some concessions to Europe. China seems to want to create an international order led by China, but to do so without making that intention obvious.

-Isn’t China seeking a relatively equal relationship with the United States as one of the G2, and particularly trying to make East Asia and the northwestern Pacific its own sphere of influence?

▲That risk is why we need to be more cautious, and China also sometimes acts prudently. In that context, people in China hope that a different kind of leadership will emerge in the post-Xi Jinping era. There are too many problems to continue as things are: youth unemployment, the wealth gap and the property market. In the past, Chinese premiers managed domestic issues and sometimes stood up to the president. Premier Wen Jiabao and Premier Li Keqiang did so, but there is no one like that now. Domestic issues are being suppressed while China focuses exclusively on strategic competition with the United States. That could provoke a backlash, and I think it is one of China’s current limitations.

Chinese officials also say they do not have the capacity to fill the strategic vacuum left by the United States. They are not ready yet. In the past, people used to ask when China’s gross domestic product (GDP) would surpass that of the United States. These days, many seem to think that will be difficult because of the United States’ high growth rate and China’s low birthrate and aging population. If so, we can imagine a world in which the two countries engage in managed strategic competition under the current conditions. If China does not go beyond its ambitions, and the U.S.-China rivalry hits bottom, other countries could speak out together and the current trend could shift toward reglobalization or international cooperation. That is what I hope will happen. In any case, the current situation is too difficult to sustain, and I do not think it can continue this way.

-Still, isn’t U.S. hegemony continuing to weaken?

▲General theories about the rise and fall of hegemony suggest that an advantage in productive capacity, including technology, comes first. The resulting trade surpluses accumulate, and confidence in those surpluses leads to financial hegemony. Military hegemony is then built on that foundation. Conversely, when productive efficiency declines and trade deficits worsen, people lose confidence in holding that country’s currency. Financial hegemony collapses, and finally the country loses its military hegemony, the last thing it had maintained. That seems to be what happened in the case of Britain.

In the United States, manufacturing capacity has declined and trade deficits have emerged, but financial hegemony remains intact, as shown by the dollar’s share of foreign-exchange reserves held by countries around the world. Economic growth is in the 2% range, the country is dominant in emerging technologies such as AI (artificial intelligence), and its financial indicators are very strong.

Rather, I think the U.S. national debt is the problem. People have recently been talking a lot about Ferguson’s law, attributed to an 18th-century British scholar. The main idea is that a country—especially a hegemonic power—will collapse if the interest payments on its national debt exceed its defense spending. In 2024, U.S. interest payments exceeded its defense spending.

-In our interview last April, you said that if Trump’s failure over the Iran war became clear, there would be a grand strategic realignment in the United States. Could the country now move toward emphasizing the importance of alliances?

▲There are broadly two strands of U.S. grand strategy. The first is to give up hegemony and become an ordinary great power, even if it remains the world’s strongest country. That is the position of the MAGA movement, the Democratic left and restraint advocates. Each country should fend for itself; the United States should focus on American interests and not play a hegemonic role. The problem with this approach is that the United States would also give up the reserve currency and, consequently, abandon the management of its alliances. The benefits of hegemony are hidden, while the costs are immediately visible, so people reach the wrong conclusion. That is populism.

The second approach is to maintain hegemony while sharing the burden and authority involved in the use of power. Most U.S. policymakers, including Trump, are pursuing this grand strategy of recalibrating hegemony; they differ only in their methods. Ultimately, it is a question of how to manage alliances. Even when Trump lashes out at allies, he still wants to maintain the alliances. Trump’s approach to alliance management has been a major failure, so the importance of alliances is likely to come to the fore. At the same time, the United States may continue to demand that allies share the burden. The most likely outcome is a recalibration in which the United States values its alliances but demands that its allies shoulder a much larger share of the burden and gives them some more authority.

-Even if Trump changes, or the Democrats take power, could pressure over investment in the United States and defense spending continue?

▲The approach could be more moderate than Trump-style unilateralism and involve listening more to the other side. Now that allied countries have experienced Trump, they will expect that if the Democrats negotiate with them over sharing the alliance burden and the allies refuse, a second Trump could emerge at any time. Trump was useful in some respects. He told Europe to contribute more to the alliance, including by increasing military spending, and the point was that talking nicely, as Biden did, would not work; ultimately, the allies had to be strong-armed.

For example, during the Roh Moo-hyun administration, anti-American sentiment was intense for various reasons. At the time, a Japanese scholar told me, “I’m very envious of South Korea.” He said that anti-American sentiment in South Korea had established a baseline, so the United States tended to be very careful in how it dealt with South Korea, whereas it did not act that way toward Japan. The United States assumed Japan would do what it was told anyway.

-There is speculation that a trilateral meeting between the leaders of the United States, Russia and China could take place on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Shenzhen, China, on the 18th and 19th.

▲There is a fairly good chance it will happen. There may be procedural issues, but Trump very much wants to hold it. He could create the impression that he is taking the lead in bringing people together to resolve something. Ideally, he could say, “I helped end the war in Ukraine through a compromise between the United States and Russia.” And since the framework for strategic stability between the United States and China would continue, Trump would have nothing to lose.

Russia also has little to lose, since it is in a tight spot. While Trump is president, Russia could secure some favorable terms or other incentives. These could include the Epstein scandal, which many people are currently questioning, or investment guarantees for the Trump family.

It would not be a bad deal for China either. It represents the developing world, the Global South, and is securing critical minerals and military bases, among other things. China does not want to appear to be reaching compromises with the United States and Russia. But if it mediates and plays the role of an agenda-setting center—essentially getting what it wants by presenting Russia as its junior partner and suggesting it can summon the United States whenever it likes because it has leverage over the country through rare earths—it would have nothing to lose. However, even if the three countries meet, there will be almost no meaningful follow-up measures.

-The United States and China are set to hold summits in Shenzhen in November and at the G20 (Group of Twenty) in Miami in December. Could they produce any meaningful results? At their last summit, they focused on managing their strategic competition.

▲That is true, but maintaining that strategic stability itself seems somewhat difficult. There are many issues the two countries need to resolve, including implementing their previous agreements and extending beyond next February the easing of China’s import restrictions and the arrangements concerning rare earths. So meeting is important even as a way to review whether they are following through on their commitments. It is important for us, too, that this arrangement be maintained and renewed. They also agreed to continue meetings on AI and military affairs.

Jeon Jaeseong, president of the East Asia Institute, is being interviewed by The Asia Business Daily at the institute's office in Jongno-gu, Seoul. Photo by Jo Yongjun

-At the 2026 Pyeongtaek International Peace Forum held on the 5th, the keynote address by Yoon Young-kwan, a Seoul National University professor emeritus who served as foreign minister under the Roh Moo-hyun administration, drew attention. His main point was that emotional political debate over recent skepticism about the South Korea-U.S. alliance would miss the point if it were not accompanied by deep reflection on the question, “What would happen if the South Korea-U.S. alliance were dissolved or hollowed out?”

▲As I said earlier, this is a very important moment when the United States is recalibrating its role in and perspective on its alliances. The roles and missions of military alliances are now being defined differently in a world order that has changed completely. If we want to keep the alliance as a useful instrument, we should first define our relationship with the United States and our relationship with China in East Asia, and then consider what to do about the alliance. But judging it based on the various issues that arose in the past, such as autonomy or inter-Korean relations, is itself a major problem.

For example, when we look back from 2050 at 2026, our alliance should be one that lets us say, “That was a truly important turning point. We did not judge the alliance by the past; instead, we thought carefully about the period after 2026 and adjusted the alliance well. That ultimately became a success story for us.” But almost no one thinks that way.

-What, specifically, is most important?

▲The most important factor in setting the framework is China. The alliance must be designed amid an intense discussion between South Korea and the United States about how to define their relationship with China. North Korea is not really important. It is doing perfectly well with China and Russia. North Korea has no intention of going to war with South Korea, so simply managing it appropriately should be enough as long as the South Korea-U.S. alliance remains in place to some degree. The United States now seems to view the South Korea-U.S. alliance as a tool for dealing with China. South Korea needs to state its position on that, but in reality, we have none.

-This would probably include what South Korea would do if China invaded Taiwan: whether U.S. forces in South Korea would be deployed, and whether, since we provide bases, we would be hit by missiles as in the Middle East, among other things.

▲There is no discussion of that either. What would happen if “the United States lost” or “China absorbed Taiwan through reunification”? What if we had helped the U.S. military—or had not helped the United States—and China took control of everything related to the transport routes, including the South China Sea and the East China Sea? We should have had some answer about how we had defined our relationship with China and why we operated the South Korea-U.S. alliance the way we did. We should have considered every possible scenario and worked out in advance how far, and under what conditions, we would allow the alliance to serve as a tool against China. Then, if a sudden crisis involving Taiwan occurred, whether with China or the United States, we should be able to look back and conclude, “South Korea’s position was understandable.” If we take no position and simply say, “We’ll just avoid getting involved,” then ask, “What should we do now?” once the outcome is clear, our position will be extremely weak. We have considerable strategic resources right now, and we need to use them as leverage effectively.

-It also seems that people are responding too emotionally to the transfer of wartime operational control.

▲Future wars will unfold in ways very different from what we see today because of AI. Even if we take back wartime operational control, consider what would happen when we are directing a war: the U.S. military says its AI analysis indicates we should strike here, and that its space satellites show this. How would we understand that using the information the United States provides to our commanders? The gap is enormous. Would we just say, “Then go ahead,” without any information? The question is whether we can build in advance the capacity to absorb that technological gap in command and control. The United States says, “We’ll do it for you, so let’s work together.” If we do not develop a way to cooperate with the United States while preserving our agency amid the technological gap in AI-driven warfare, taking back wartime operational control could prove meaningless. Because our capabilities are centered on the U.S. military and we operate under a combined command structure, South Korea and the United States ultimately have to make decisions together. Autonomy within that structure ultimately depends on capabilities. If we say, “Let’s cooperate only when we need to,” we may be autonomous, but we will not receive support.

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