The U.S. and Chinese flags are raised during a state dinner hosted by President Xi Jinping at the Great Hall of the People in Beijing, China, on May 14, 2026.
Alex Wong | Getty Images News | Getty Images
BEIJING – Democrats seizing power from Republicans in Congress raises the risk of escalating tensions between the U.S. and China over Taiwan and intensifies high-tech competition, analysts say.
Democrats won overwhelming victories in this week’s midterm elections, gaining majorities in the House and Senate and flipping governorships in states such as Texas, Nevada and Iowa. But most of the new elected officials won’t begin their terms until January.
By then, US President Donald Trump and Chinese President Xi Jinping are likely to maintain a fragile ceasefire with two meetings, one in Shenzhen this month and one in Miami, Florida, next month.
“As a lame duck increasingly focused on his personal legacy rather than the success of the Republican Party, President Trump may resist growing pressure to confront China and continue his pursuit of ‘strategic stability,’” Teneo managing director Gabriel Wildo said in an email.
According to CNBC, the top priority for Democrats is repealing President Trump’s tariffs as part of a broader focus on combating domestic inflation.
“As a result of the midterm elections, Democrats could push U.S. China policy in a more hawkish direction through hearings and legislation, particularly on economic security issues and Taiwan,” said Scott Kennedy, senior adviser and director of China Business and Economics at the Center for Strategic and International Studies.
But any efforts “will be constrained by the executive branch’s broad discretion and by China’s growing power and influence, which cannot be easily reversed,” he said.
Major economies have struggled to contain a surge in imports from China, while Beijing has welcomed a flurry of world leaders this year. China’s dominance in rare earths has given it leverage in trade negotiations with the United States and the European Union.
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,” said George Chen, partner and co-chair of the digital practice at consultancy Asia Group.
“Congress has repeatedly demonstrated a willingness to pursue Taiwan initiatives even when the administration is more cautious,” he said, noting that Trump’s balancing act is likely to be more difficult.
Nancy Pelosi’s 2022 visit to Taiwan while she was speaker of the House of Representatives infuriated Beijing, which considers the democratically self-governing island part of its territory. The United States maintains unofficial relations with Taiwan under its “One China” policy.
Hakeem Jeffries, a New York minority leader who is set to become the first black speaker of the House of Representatives in U.S. history, met with Tsai Ing-wen, then president of Taiwan, in New York in 2023.
During Trump’s visit to Beijing in May, Xi warned that mishandling Taiwan would plunge U.S.-China relations into a “major crisis.”
Maintaining Taiwan’s stability has become even more important in the artificial intelligence race because Taiwan is home to semiconductor giant TSMC, which makes many of Nvidia’s chips.
In recent years, the U.S. government has tightened restrictions on Chinese companies’ purchases of advanced chips from Nvidia, spurring Beijing’s efforts to develop its own version of the technology.
technology competition
U.S. stocks soared Wednesday after President Trump acknowledged the Democratic Party’s victory in the election, and oil prices fell after the U.S. government signaled further efforts to end the war with Iran. Apple and most of the “Magnificent Seven” tech stocks rose despite falling stock prices. Nvidia.
But Chen said there is “a broader consensus emerging in Washington that U.S. technological superiority should not be used to strengthen China’s military and strategic capabilities,” noting that Congressional Democrats may have an incentive to take more aggressive action.
“As a result, even if President Trump and Xi continue to maintain relatively friendly summit diplomacy, Beijing may find that technology becomes a source of increased friction,” he said.
The outlook for the technology ultimately depends on larger questions about AI.
Chinese tech stocks rose on Thursday, continuing a recent rebound from last month’s sharp decline.
WisdomTree’s Liqian Ren said the Chinese government’s latest regulatory intervention is helping the market. But he said the performance of Chinese tech stocks ultimately has more to do with global investor sentiment towards AI.
“There’s a lot of uncertainty about how much AI can deliver for the United States and China,” she says.
—CNBC’s Justin Papp and Kevin Breuninger contributed to this report.
