A Democratic Congress cannot repeal tariffs it never voted on

Donald Trump’s party was routed in the 3 November midterms. Democrats took both chambers, gaining at least 30 House seats and flipping at least seven Senate seats in places like Texas, Iowa and Kansas. It is a political body blow for the President. For New Zealand exporters, it changes almost nothing.

The instinctive read in boardrooms will be that a weakened Trump means trade risk is easing. That read gets the mechanics wrong. The tariffs hitting Kiwi goods were imposed by executive action, sit on firmer legal ground than the ones the Supreme Court threw out, and keep multiplying on their own timetable.

The tariffs never went through Congress

Fiona Cooper, executive director of the NZ-US Council, puts it plainly. “We think the tariffs have contributed to US inflation and I think many US voters acknowledge that. However those policies have been done by the President using executive orders without going to Congress.”

That is the whole problem. Voters punished Republicans partly over prices, with economist Jonathan Mason noting exit polling showed 66% of Americans oppose tariffs because of affordability. But anger at the ballot box does not translate into a repeal vote. Democrats gain committee chairs, subpoena power and the ability to drag officials in front of hearings. Undoing tariffs would require legislation Trump signs, and he holds the veto pen. The new Congress does not even sit until January 2027, leaving two more months of Republican control.

The courts have already played their best card

The one lever that did work was litigation. In February 2026 the Supreme Court struck down the Liberation Day tariffs imposed under emergency powers, on the basis that taxing is Congress’s job. The administration simply switched statutes. On 23 July it announced Section 301 “forced labour” tariffs covering 60 economies and 99% of US goods imports, with New Zealand landed at 12.5% from 24 July.

The forced labour justification is absurd as applied to New Zealand, and Trade Minister Todd McClay said so, describing it as the US “looking for any way to put a tariff rate back on”. Absurd is not the same as unlawful, though. Section 301 is authority Congress delegated to the President decades ago. In August, Washington Post economics correspondent David Lynch told RNZ it was “legitimate, constitutionally delegated authority to the president”.

New Zealand’s biggest exporters agree. Meat Industry Association chair Nathan Guy says the tariffs appear to have stronger legal footing than the earlier measures, while Fonterra’s general manager of trade strategy Justine Arroll says they “looked less likely to be overturned in the US courts”, with the administration “very mindful of the Supreme Court decision.”

Dairy and wine are paying a European penalty

The 12.5% rate is not just a cost, it is a competitive handicap. Beef and kiwifruit remain exempt, but dairy and wine, previously spared, are now exposed. Economies that signed reciprocal trade agreements with Washington, including the EU, got a lower 10% rate. That leaves a 2.5 percentage point gap against European cheese and wine on the same shelf, stacked on top of existing most-favoured-nation duties. No midterm result narrows it.

The pipeline does not pause for elections

Fresh risk keeps arriving regardless of who runs Capitol Hill. Trump faces a decision on lamb tariffs next year if a US International Trade Commission investigation finds injury to American sheep farmers. MFAT’s latest weekly report flags an active Section 232 national security investigation covering wind turbines and other products, launched in the run-up to polling day. That sits alongside an existing stack of Section 232 tariffs on autos, metals, timber and furniture, several scheduled to escalate.

The Reserve Bank’s modelling shows why this matters beyond any one election. Its March analysis projected New Zealand exports to the US would be 13% lower in year one, and still 6% lower by 2040, as trade diversion pushes rival goods into our other markets. A two-year congressional cycle is a rounding error on that horizon.

Price contracts for permanence

The one piece of good news is backward-looking. Exporters who chased refunds on the struck-down emergency tariffs may now get money back. Treat it as a windfall, not a signal. Advisers quoted in the same coverage tell exporters to “regard tariffs as being a permanent feature of the US trade policy landscape”, warning that smaller entrepreneurial exporters are most likely to be caught out.

There is a case that the midterms make things worse. A lame-duck President facing a hostile Congress has fewer domestic levers left. Trade action is one he fully controls, and he has every reason to use it to protect his legacy. Mason allows that Trump and Congress “might get together and hammer something out”, but adds he wouldn’t count on it.

Neither should exporters. The practical moves are unglamorous: build the 12.5% into base pricing, renegotiate who carries duty in US contracts, model a lamb tariff scenario for 2027, and keep diversifying away from a market whose rules change by executive order. Washington’s politics just shifted. Its trade machinery did not.

Sources

• NZ Herald: Trump’s midterm defeat won’t make the US a more predictable trading partner – Fran O’Sullivan (2026-11-06)
• Farmers Weekly: Trump tariffs to survive mid-term gridlock (2026-11-06)
• SME Stream: What the US Mid Terms could mean for the NZ economy (2026-11-05)
• RNZ: The return of Trump’s tariffs (2026-08-01)
• MFAT: US confirms Section 301 forced labour tariffs on 99% of US imports; New Zealand subject to 12.5% additional duty (2026-07)
• RNZ: NZ rejects US claims of ‘forced labour’, as tariffs hiked (2026-07-24)
• Farmers Weekly: New US tariffs just the start of more disruption (2026-11-06)
• MFAT: 3 November 2026 Weekly Global Economic Report (2026-11-03)
• Trade Barriers NZ: FAQs
• NZ Herald: New Zealand exporters may get US tariff refunds after Supreme Court ruling (2026-11-06)