UNITED STATES · ANALYSIS

A Democratic Congress can limit tariffs only at the edges, because the duties that matter most now rest on powers Congress has already delegated to the president. For US importers, investors and consumers, the new majorities mean more oversight from January 2027, not a quick end to the duties.

The United States is the world’s largest economy, and its tariffs reach almost every trading partner. This analysis explains who holds the tariff power after the 3 November 2026 midterms, starting from our USA & Canada Intelligence Brief.

Who Holds the Tariff Power

The Constitution gives Congress the power to tax, and a tariff is a tax. Over many decades Congress delegated parts of that power to the president through several laws.

On 20 February 2026 the Supreme Court ruled 6–3 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) does not authorise tariffs. The majority held that tariffs are taxation reserved to Congress under Article I of the Constitution.

The ruling ended the fentanyl and reciprocal tariffs, but it left other tools in place.

Section 232, Section 122 and Section 301

Section 232 lets the Commerce Department impose duties on national-security grounds. A proclamation signed on 2 April and effective 6 April 2026 restructured the steel, aluminium and copper duties, applying them to full customs value, with a 50% rate for Annex I-A articles, 25% for Annex I-B derivatives and a transitional 15% for metal-intensive equipment, while derivatives with less than 15% metal content are repealed.

Section 122 of the Trade Act of 1974 allows a global surcharge of up to 150 days unless Congress extends it. The administration imposed 10% from 24 February 2026 under Section 122, and the surcharge stayed at 10% until it expired, although Trump had announced on 21 February that he would raise it to 15%.

Congress did not extend Section 122, and it lapsed on 24 July 2026. On 7 May 2026 the Court of International Trade (CIT), a specialist federal trade court, held the Section 122 global surcharge unlawful in a 2–1 decision, according to Thompson Coburn.

The Office of the US Trade Representative (USTR) then used Section 301, which targets unfair foreign practices, to set 10% or 12.5% duties on 60 economies from 24 July 2026. Neither Section 232 nor Section 301 needs a new vote of Congress to take effect.

That is the core reason why the election changes less than many voters may expect.

The former Stelco rolling mill beside a canal in Montreal, Canada. (File photo)

The Numbers That Matter

Tariffs are now a large and uneven source of federal revenue. The figures below come from the Dave Manuel tracker, a secondary source built on the Monthly Treasury Statement, and we could not check them against Treasury itself.

• September 2026 net customs duties: $5.9 billion.

In the three months after the Supreme Court ruling, refunds paid exceeded duties collected, according to the same tracker. Exit polling highlighted voter concerns about tariffs, inflation and the cost of living.

Edmonton City Hall in Alberta, Canada. (File photo)

The Actors and What Each Wants

Democrats won both chambers, according to CBS, NBC and Al Jazeera. Seat counts are still settling.

• Hakeem Jeffries, House Minority Leader, is expected to become Speaker in January 2027; that is a media expectation, not a vote.
• Chuck Schumer, Senate Minority Leader, introduced a bill in September 2026 against Trump’s tariffs on Canada, with 13 Democratic co-sponsors including Ron Wyden.
• Ron Wyden, ranking Democrat on Senate Finance, and Richard Neal, ranking Democrat on House Ways and Means, are likely committee chairs, though chairs are not formally set.
• Jamieson Greer, US Trade Representative, runs the Section 301 action and is the expected target of more hearings.
• Howard Lutnick, Commerce Secretary, oversees the Section 232 investigations.
• John Thune, Senate Majority Leader, and the current Republican-led Congress stay in office until the new Congress is seated in January 2027.

The courts are the fourth actor. The Supreme Court and the CIT have so far been a stronger check on tariffs than Congress.

What Congress Can Realistically Do

Congress can pass a bill to limit tariff powers, but the president can veto it. Al Jazeera reports that Democrats lack the two-thirds majorities in both chambers needed to override a veto.

That leaves oversight. Expansión, a Mexican business outlet, quotes UBS expecting more hearings with Greer and tighter scrutiny of how tariffs are used, while noting the president keeps broad trade powers.

Al Jazeera also says Democrats could push for exceptions that give exporters temporary relief. On 11 February 2026 the House voted 219–211 for H.J.Res.72 against the Canada tariffs, while Republicans still controlled the chamber, a margin short of a veto-proof two-thirds.

Trump can veto such a measure, so durable change needs his signature or a new president in 2029. Executives expect few immediate changes because Section 232 tariffs rest on executive authority, according to the Mexican outlet informabtl.

What It Means for Mexico and Canada

The three USMCA parties held their first joint review on 1 July 2026. USTR stated that the United States “did not agree to renew the USMCA in its current form,” according to law firm Thompson Hine.

The agreement therefore stays in force to 1 July 2036 with annual reviews, instead of a 16-year extension. Annual reviews give Washington a recurring lever over both neighbours, whoever controls Congress.

Canada

Talks collapsed when Lutnick’s late demands derailed the draft deal less than an hour before the Friday 21 August deadline. Trump said the two sides were “very close to having a deal.”

The deal would have cut the regular auto tariff to 15% from 25%. CBC and BNN list Canadian exposure at up to 50% on steel, aluminium and copper, 25% on vehicles and an extra 10% on softwood lumber, with CUSMA-compliant vehicle content and parts exempt.

Mexico

President Claudia Sheinbaum said on 28 October that she wants a significant reduction in Section 232 duties on cars, steel and aluminium. On 16 October Economy Secretary Marcelo Ebrard told lawmakers that Mexico expects US tariff cuts on steel and cars “in the coming weeks or months.”

A Spanish-language press summary says Democrats lean towards keeping the deal trilateral, but we could not verify that.

Scenarios

These are scenarios, not forecasts. In a stabilising case, Canada and Mexico secure lower Section 232 rates through negotiation, and Democrats use hearings to press for exemptions and refunds.

In a second case, little changes: the president keeps the 232 and 301 layers, vetoes any limiting bill, and the next test is the 2028 election. Importers would then plan around a permanent tariff floor.

What It Means for You

Importers can recover IEEPA duties through the CBP refund system, and the CIT certified a class action on the issue on 8 October 2026. The 232 and 301 costs, however, will probably stay in supplier prices for now.

Investors should treat tariff risk as an executive-branch risk first and a legislative one second. Consumers should not expect lower prices on steel, aluminium, copper, cars or lumber because of the election alone.

What Is Not Known

Final seat counts are not settled, and the sources conflict on the Senate margin. We also do not know who will lead the Senate or the House in 2027, or whether Democrats plan a specific tariff bill.

Our brief says Trump signalled he would defy congressional vetoes, but we could not verify the detail. We also could not confirm whether the Section 122 ruling is under appeal, or whether any deal with Canada or Mexico has been announced.

What to Watch

• January 2027: the new Congress is seated, and committee chairs and leaders are formally named.
• The Canada talks on cars, and Mexico’s request for lower 232 duties, in the coming weeks.
• Any new Section 232 action, and the CIT refund class process.
• Annual USMCA reviews to 1 July 2036, and the 2028 presidential election.

Frequently Asked Questions

Can a Democratic Congress end Trump’s tariffs?

Not on its own. Democrats lack the two-thirds majorities needed to override a veto, and Section 232 and Section 301 tariffs rest on authority already delegated to the president.

When does the new Congress take power?

The new majorities take effect in January 2027. Until then the current Republican-led Congress stays in office.

Which tariffs did the Supreme Court strike down?

On 20 February 2026 the Court ruled 6–3 that IEEPA does not authorise tariffs, which ended the fentanyl and reciprocal tariffs. Section 232 and Section 301 duties were left in place.

Are IEEPA tariff refunds available?

Yes. CBP launched the CAPE refund system on 20 April 2026, and the CIT certified a nationwide class of importers on 8 October 2026.

What tariffs do Canada and Mexico face now?

Section 232 duties on steel, aluminium and copper reach as high as 50%, with lower tiers for specific categories.

What is the status of the USMCA review?

After the first joint review on 1 July 2026, USTR said the United States did not agree to renew the agreement in its current form. It stays in force to 1 July 2036 with annual reviews.