Experts told CNBC that as the Democratic Party takes control of Congress, U.S. President Donald Trump may focus more on foreign policy in the last two years of his term, and he will also face greater scrutiny regarding the wars in Iran and Ukraine.
The Democrats will gain a majority of seats in the Senate. According to The Associated Press, they are expected to take seats away from the Republicans in Iowa, Kansas, North Carolina, Ohio, South Carolina, and Texas.
The Democratic Party also won control of the House of Representatives, which will give the party more leverage to oversee the government, influence spending, and challenge Trump's foreign policy agenda.
"We will see a president who is subject to certain constraints in overseeing and investigating affairs, but in terms of foreign policy, he still has a great deal of leeway," said Laurel Lapp ( Laurel Rapp ), director of the U.S. and North America program at the Chatham House, in the CNBC program's Squawk Box Europe segment.
Lap said that the Iran war is a "major issue" in this electoral cycle, due to factors such as soaring fuel prices, rising food costs, and inflation. She stated that this war began after Trump launched a joint strike with Israel on February 28th.
Iran's War Power
"The Republican Party doesn't really have many options at this stage. We know that the Democratic Party will seek to push for votes in both the House of Representatives and the Senate in order to limit the Republican Party's actions regarding government authority in the Iran war. But whether that will truly be able to constrain the government is another matter," added Rapp.
She stated that the Democratic Party could use its “wallet power” to limit U.S. military spending and other expenditures related to Iran.
With control over both houses of Congress, the Democratic Party could attempt to legislate to require Trump to end the United States' involvement in this conflict. However, for such a measure to remain binding after a presidential veto, Congress would need to have a sufficient number of votes to override the veto.
Berenberg's chief economist, Holger Schmidting ( Holger Schmieding ), predicted in a report on Wednesday that Iran will face its last round of bombings, and that Trump will ultimately reach an agreement to re-open the Strait of Hormuz before 2027, as voters will feel the pressure of high prices and fuel costs.
Trump still retains power
J.C, a senior researcher at the German Marshall Foundation, J.C Lintzenich, stated that the president is not a "lame duck."
"Remember, what this election changes is the Congress; it does not change the president," Linzenich said on Wednesday in the program "Squawk Box Europe" on CNBC.
The President of the United States still possesses a great deal of power and authority. There are still actions we need to take in Iran. Moreover, there are unresolved situations between Russia and Ukraine.
He added that although Congress has changed, foreign policy is still carried out by the president and the officials he appoints.
"We will now see more oversight by Congress, for example, regarding the use of funds for Ukraine, which is required by laws and regulations," said Linsenich.
Lindenicich stated that the previous Congress 'was more willing to let the White House handle things on its own,' but with Democrats controlling both chambers, Congress will be more powerful and will use its constitutional powers under Article I regarding legislation, appropriation, and oversight to more strictly require the White House to comply with current laws and congressional demands.
Schmidting of Berenberg warns that as Trump loses control of the Senate, there may be "more trouble" in the future.
"As a person who has long sought attention but lacks a consistent long-term strategy, he might be more eager to pursue risky geopolitical adventures," said Schmidting.
"It's very likely that Congress will not provide him with the funds to undertake expensive operations like the war in Iran... We may have to prepare for significant diplomatic policy noise during the last two years of President Trump's term," he added.
The Russia-Ukraine situation is a 'tail risk'
Schmidting stated that the Russia-Ukraine war would be a "tail risk," as Trump might attempt to "pressure Ukraine into effectively surrendering to Russia's demands"—but he added that such an outcome is unlikely, as the president has already lost support within his own party on this issue.
Schmidting believes that after the defeat in the mid-term elections, Trump's influence over the Republican Party may decline, especially since most Republicans, including Secretary of State Marco Rubio ( Marco Rubio ), do not agree with his sympathy for Putin.
"This helps to mitigate the risk of Trump attempting to impose an unacceptable agreement on Ukraine. Therefore, we consider this to be more of a tail risk, rather than a likely outcome."
