US midterms flip Congress, with lessons for Australia, experts say

The Democratic Party won control of the US Congress in this week's midterm elections, a result observers say should broaden Australia's alliance with the US while creating new power centres in Washington that could affect Aukus, datacentre development and relations with China.

Analysts said public fury over rising living costs, particularly fuel prices, and the impact of datacentres were factors in the US results that carry warnings for Australia. Bruce Wolpe of the United States Studies Centre said Trump's ability to energise voters had been undermined by cost of living, and that the Albanese government was taking a hit from the economic fallout of the Iran war, with people uncertain where the economy would end up.

Westpac's head of international economics, Elliot Clarke, said the landslide midterms had dramatically changed the outlook for the Iran war, which could affect Australia's economy. He described it as positive news for the atmospherics around the Middle East conflict. Global oil prices fell sharply as results emerged; Brent crude, which had threatened to pass its April peak, plunged by 20%. More confidence in a Middle East resolution could also help curb inflation and reduce pressure on central banks to raise rates, Clarke said.

Coalition frontbencher Andrew Hastie said the results showed economic messaging was critical and Australians felt worse off after tariffs and the Iran war. Former ambassador to Washington Arthur Sinodinos said the change on Capitol Hill was a chance to progress policy goals with both US parties and look beyond the 2028 election. He said Congress might press the administration to support Ukraine and fund munitions, and China might feel more emboldened, though he did not expect sudden action on Taiwan. He praised Anthony Albanese's professional approach to Trump and said the Australian government should keep working with the administration and keep its head down.

Ed Husic, former industry minister, called for a radical shake-up, saying now was the moment to reset the relationship with the Trump administration, and a different Congress should not hurt allies such as Australia with tariffs. He also flagged possible changes to US AI regulation as the Albanese government prepares major legislation for 2027. Bernie Sanders has called for a moratorium on new datacentre construction. Greens senator Sarah Hanson-Young said it was no coincidence that datacentre hotspots like Texas, Georgia and Ohio shifted to Democrats, arguing communities were being asked to hand over land, water and power while benefits for ordinary Australians remained hard to identify.

Acting prime minister Richard Marles said cost-of-living and datacentre anxiety was at play in both countries, stressing the need to get the social licence right, including where datacentres are built and ensuring they get the right power and water.

Abe Denmark, a partner at The Asia Group and an architect of Aukus in the Biden administration, warned against over-interpreting the results. He said power would be redistributed in Washington, creating new centres to engage: Democratic chairs controlling authorisations and appropriations, Republicans more willing to break ranks, and 2028 hopefuls. That gave Australia more points of engagement but also more noise, and Canberra must distinguish political positioning from durable policy. Denmark said Democrats could take a different view from Trump on Aukus spending, as the US submarine industrial base needs a dramatic production increase, and Congress must urgently pass a funding deal and a key defence spending bill.

Trump claimed Republicans had fared poorly because he was not on the ballot, despite repeatedly urging voters to pretend he was. Vice-president JD Vance called Trump's war in Iran "the obvious culprit".

Source: The Guardian World.