The U.S. and Chinese national flags are seen during a state banquet hosted by Chinese President Xi Jinping at the Great Hall of the People on May 14, 2026 in Beijing, China.
Alex Wong | Getty Images News | Getty Images
BEIJING — Democrats taking power from Republicans in Congress raises risks for U.S.-China tensions around Taiwan, while hardening tech competition, analysts said.
The Democrats swept this week’s midterm elections, taking majorities in the House and Senate and flipping governors’ offices in places like Texas, Nevada and Iowa. Most of the new election winners, however, won’t begin their terms until January.
Before then, U.S. President Donald Trump and Chinese President Xi Jinping will likely maintain their fragile truce by meeting twice: in Shenzhen this month, and in Miami, Florida, next month.
“As a lame duck who is increasingly focused on his personal legacy rather than the Republican Party’s success, Trump may resist increased pressure for confrontation with China and continue his pursuit of ‘strategic stability,'” Gabriel Wildau, managing director at Teneo, said in an email.
High on the Democrats’ agenda is removing Trump’s tariffs, as part of a broader focus on addressing domestic inflation, CNBC has learned.
“On balance as a result of the midterms the Democrats may nudge the U.S.’s China policy in a more hawkish direction through hearings and legislation, particularly on economic security issues and Taiwan,” said Scott Kennedy, senior advisor and trustee chair in Chinese business and economics at the Center for Strategic and International Studies.
But any efforts will “be constrained by the executive branch’s wide range of latitude and China’s growing power and leverage, which can’t be easily undone,” he said.
Beijing has hosted a flurry of global leaders this year, while major economies have struggled to slow a surge of imports from China. Chinese dominance in rare earths has given Beijing leverage in trade talks with the U.S. and the EU.
Taiwan
“Taiwan remains the most dangerous issue in U.S.-China relations and, in my view, the area where a Democratic Congress is most likely to challenge Beijing,” wrote George Chen, partner and co-chair of digital practice at consultancy The Asia Group.
“Congress has repeatedly shown a willingness to pursue Taiwan initiatives even when administrations are more cautious,” he said, noting Trump’s balancing act will likely become more difficult.
Nancy Pelosi’s visit to Taiwan while House Speaker in 2022 angered Beijing, which considers the democratically self-governed island part of its territory. The U.S. maintains unofficial relations with Taiwan under a “One China” policy.
Minority Leader Hakeem Jeffries (D-N.Y.), who is poised to become the first Black Speaker of the House in U.S. history, met in 2023 in New York with Tsai Ing-wen, who was then president of Taiwan.
During Trump’s trip to Beijing in May, Xi warned that mishandling Taiwan would put U.S.-China relations in “great jeopardy.”
Maintaining stability over Taiwan has grown more critical in the artificial intelligence race as the island is home to semiconductor giant TSMC, which manufactures many of Nvidia’s chips.
Over the last several years, the U.S. government has tightened restrictions on the ability of Chinese companies to buy advanced chips from Nvidia, spurring Beijing’s efforts to develop its own version of the technology.
Tech competition
U.S. stocks surged Wednesday after Trump accepted the Democrats’ election wins, and oil prices fell following indications Washington would do more to end the Iran war. Apple and most “Magnificent Seven” tech stocks surged, despite declines in Nvidia.
But there’s an “emergence of a broader consensus in Washington that America’s technological lead should not be used to strengthen China’s military or strategic capabilities,” Chen said, noting a Democratic Congress may be motivated to be more aggressive.
“As a result, Beijing may discover that technology becomes a growing source of friction even if Trump and Xi continue to maintain relatively cordial summit diplomacy,” he said.
The tech outlook ultimately depends on bigger questions about AI.
Chinese tech stocks climbed Thursday, extending a recent rebound from a sharp sell-off last month.
Beijing’s latest regulatory intervention has helped support the market, said WisdomTree’s Liqian Ren. But she said Chinese tech stock performance is ultimately tied more to global investor sentiment on AI.
“There’s a lot of uncertainty on how much AI can deliver for U.S., or for China,” she said.
—CNBC’s Justin Papp and Kevin Breuninger contributed to this report.
