Goldman Sachs previews U.S. midterm elections: Democrats are likely to win control of the House, with fiscal policy, tariffs, and AI regulation emerging as key points of contention.

Goldman Sachs has released a US economic analysis report noting that the Democratic Party’s probability of securing a majority in the House of Representatives exceeds 90%, while control of the Senate remains uncertain. If the Democrats take the House, fiscal deadlines including the December 11 expiration of spending authorization and the 2027 debt ceiling will become key legislative battlegrounds. Goldman Sachs projects that the Democrats may leverage forced events such as government shutdown risks or the debt ceiling to push for policy concessions. In a Democratic victory scenario, while major fiscal policy changes are unlikely over the next two years, spending will likely rise slightly, with 2027 expenditure projected to increase by roughly 0.25% of GDP. On tariffs, Goldman Sachs believes that while the Democrats aim to roll back some tariffs, Trump will likely release the results of the Section 301 investigation and impose new tariffs after the midterm elections. The impact of these new tariffs will outweigh the Democrats’ partial cuts, potentially leading to a net increase of just under 2 percentage points in the US’ effective tariff rate. In the AI and data center space, attention to data center issues is expected to cool after the election, with little likelihood of a nationwide construction pause. Congress’ focus will shift to AI regulation, where a moderate compromise including basic federal oversight and corporate self-testing may be reached. If the Democrats win either chamber of Congress, investigations into large tech companies are anticipated, and stricter AI restriction bills may also be introduced at the state level.