The 5 big voting issues in the midterm -2-

Trump, for his part, has claimed that Democrats will nix some of his tax cuts, but as president, he could veto such a move. "If the Democrats for any reason won, all of the no tax on tips, no tax on Social Security for our great seniors, no tax on overtime - it all gets eliminated," Trump told reporters in September.

The total effective tariff rate for U.S. imports has settled at around 12% after big moves over the past two years, such as those due to Trump's "liberation day" tariffs and to a Supreme Court ruling.

What Trump and Republicans would do: Treyz of Veda Partners doesn't expect a major GOP push on tax policy, because the party just enacted its huge taxation and spending package last year. "There's not a lot of tax focus that I hear from Republicans, mostly just because they already did the One Big Beautiful Bill," she said.

Republican action against Trump's import taxes isn't likely either, according to Treyz. "I don't think Republicans would be able to pull the president back from even the Canada tariffs," she told MarketWatch.

Supporting the status quo on tariffs could risk blowback from constituents. An AP-NORC poll in September found that 64% of U.S. adults think Trump has gone too far in imposing new tariffs on other countries, up from 58% in January.

5. AI and data centers

What Democrats would do: If Democrats control both chambers of Congress, get ready for bills aimed at protecting American workers and holding AI companies accountable, UBS analysts said in a note. Trump, who has repeatedly defended the AI industry and the data-center build-out, is likely to veto such measures, but they would still give Democrats a way to send a message.

"If polling continues to find Americans' opinion of AI souring, this will likely become a potent issue in the Democratic presidential primaries, with candidates who are sitting senators introducing anti-AI legislation," the UBS analysts said.

If Democrats run just one chamber, UBS sees potential for a bipartisan deal that "speeds permitting while assigning more grid-upgrade costs to data-center developers."

Watch for a Democratic drive to end tax breaks for AI data centers, which would come if the party is able to negotiate with Trump on raising the debt ceiling, according to Treyz of Veda Partners.

"If Republicans are not able to increase the debt ceiling at the end of this year, and Democrats have an opportunity to hold President Trump's feet to the fire when it comes to getting legislation passed, this could be a really sizable tax bill, especially if AI is a prominent focus for everybody going into the 2028 presidential election - which I expect it will be," she said.

Some 61% of Americans are somewhat or strongly opposed to the construction of new data centers where they live, according to a survey from the University of Pennsylvania's Annenberg Public Policy Center.

What Trump and Republicans would do: Trump and other Republicans argued last year for a federal moratorium on state and local AI laws, and that could become a priority again if the GOP keeps its grip on both chambers of Congress, according to the UBS analysts. But they added that the need for 60 votes in the Senate means the success of such a measure is unlikely.

Trump's defense of data centers is grounded in how the AI industry AIQ has been a major driver of the U.S. economy and the stock market SPX - and in its role as the U.S. competes with China.

An AI-related disaster could spark significant action in Congress regardless of which party holds the reins. Treyz said the trigger would be "if there's anything that actually happens from AI," such as "if the hospitals shut down."

She expects it will be relatively easy for any Congress to "find consensus on really low-hanging fruit - child protection, consumer protection," but notes that a generational change on Capitol Hill might bring about bigger policy shifts.

"We have a record number of retirements, so no matter what happens in the election, we're going to have at least 63 new congressmen, and a lot of those guys are younger and they all have a 10-point plan for how they want to reform AI," Treyz said.

-Victor Reklaitis -Robert Schroeder

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(END) Dow Jones Newswires

10-26-26 0930ET