What The 2026 Midterms Mean For US Manufacturers

Democrats won majorities in both chambers of the US Congress in the 2026 midterms. From January 2027, they’ll decide which issues get hearings and have more leverage over federal spending, while President Trump retains his veto and wide discretion over trade. For manufacturers, that split means they will need to make decisions about what to buy, where to expand and which suppliers to approve while tariffs, energy permits and federal contracts are still being debated in Washington D.C.

Tariff exemptions will come under closer scrutiny

With control of the trade committees, Democrats can call hearings on who gets tariff exemptions and what duties are costing manufacturers. A broad rollback would likely face a presidential veto, and the administration can still impose new duties. Its Section 301 investigations into excess manufacturing capacity cover 16 markets, including China, Vietnam and Mexico.

Meanwhile, the 2027 joint review of the US-Mexico-Canada Agreement is another date for North American suppliers to watch, since changes to rules of origin could affect which parts qualify for preferential tariffs. With 63% of manufacturers surveyed by the National Association of Manufacturers (NAM) planning to import industrial machinery or components over the next 12 months, buyers placing equipment orders months ahead should consider using global trade management software to check whether the project budget still holds if an exemption expires before the shipment clears customs.

A firm power date will decide where factories expand

The Democratic win made a year-end deal on bipartisan permitting reform less likely, prolonging uncertainty for renewable and fossil fuel developers counting on faster approvals. In Georgia, Democrats won a majority on the Public Service Commission for the first time in 31 years. The commission will help decide where utilities add capacity – and who pays for it – as factories and data centres compete for power on the same grid. When a utility can power one line in 2027 and a second in 2028, engineering and finance can use energy planning software to forecast peak demand for each phase and power procurement platforms to compare contract costs across sites before deciding whether to order equipment in stages or move the expansion.

Congressional oversight will reach suppliers that never bid for a federal contract

House Oversight Democrats have already asked the Pentagon’s Inspector General to investigate specific defence contracts, and Democrats have signalled they’ll use subpoenas to examine other contractors’ dealings with the administration. An inquiry into how an agency awarded a contract can reach a supplier several tiers down, where the records show who supplied the material and its place of origin. There are several tech tools organizations can use to stand up to this scrutiny. When a buyer needs to switch suppliers to keep a line running on a federal contract, they may consider deploying an AI sourcing assistant – such as Joule in SAP Ariba – to shortlist candidates, compare bids on cost and delivery terms, and recommend a supplier to select. Before a purchasing decision-maker places the order, the contracts team could use material traceability software to check the recommended supplier’s origin records

A useful test of industrial agility is whether teams can revisit the numbers their projects are built around while there’s still time to move an order or change where a plant expands. To find out more, explore Verdantix Industrial Agility research or register for our Predictions 2027: Industrial Transformation webinar on January 26, 2027.

For more Verdantix takeaways from the midterm elections, check out our coverage of the results’ impact on green energy and the AI SaaS market.