Executive Summary Polls suggest a Republican take-over of the House of Representatives in the election on November 8, with control of the Senate contested in a few tight races. The outcome in some constituencies could be uncertain for days and come under significant legal challenges, with a potential for protests and isolated violence. Republican control of Congress will slow President Biden’s legislative agenda, embolden Trump loyalists and necessitate ‘government by executive order’. Implications for International Businesses The Feds monetary measures to curb stubborn inflation are likely to push the US economy into recession regardless of the election result and future fiscal policy. The administration will continue to use economic statecraft and especially export controls as their weapon of choice to compete with China and Russia. A Republican controlled Congress will likely focus on political revenge rather than legislative ambition but will exert downward pressure on energy prices, regulation, and corporate tax increases. State of Play Business environment will remain unchanged, with upside on corporate tax and regulations Expected Republican victories in the 2022 midterms and the ensuing ‘divided government’ will slow Biden’s legislative agenda on the economy, social issues, and the environment through 2024. The GOP will gain control of the House of Representatives, with only their majority’s size an open question. Democrats still have a chance to retain the Senate’s 50-50 seat split and thus control of the upper chamber. However, their poor performances in Pennsylvania and Nevada, and steady Republican advances in Arizona and Georgia could give the GOP the edge to take the Senate by a 1 to 2 seat margin. Legislative wins in mid-2022 and debates on social issues such as abortion and voting rights raised Democrats’ hopes to escape the ‘midterm curse’. Yet stubborn inflation, high gas prices, and a cost-of-living squeeze dominate most voters’ concerns. President Joe Biden remains unpopular and largely absent from the campaign trail. Still, a divided government after the midterms is unlikely to shift the business environment significantly. A split Congress or Republican control of both houses will lead to legislative gridlock. A GOP majority will reduce pressure on fossil fuel and environmental regulations, tighten oversight of regulators, and prevent any corporate tax increases. Despite earlier rhetoric, its leaders are unlikely to repeal the recently passed Inflation Reduction Act (IRA). Congress has traditionally avoided cutting spending packages that go to home districts. Yet, even with a recession looming in 2023, Republicans will not take new fiscal rescue efforts. Instead, they may use the upcoming debt ceiling vote early next year to push through automatic spending cuts. Amid legislative gridlock, President Biden will have to resort to governing by executive order to advance his priorities, especially on the environment, even if any such measures will be challenged in federal courts. The new majority in the 118th Congress is likely to focus on spending cuts, energy independence, and stemming illegal immigration as the cornerstones of their Commitment to America electoral platform. They will pursue politically motivated investigations into President Biden, his son Hunter and his ties to Ukraine. This could culminate in an eventual attempt to impeach the president, which will only become more likely should the GOP also control the Senate. Key Issues Continued protectionism and export controls as weapon of choice The election outcome will not change Biden’s international economic policy, which focuses on industrial policy and protectionist elements. Trade-related talks with European and Asian partners exclude market access negotiations requiring Congressional approval, and instead focus on measures to align regulation, facilitate trade, and increase competitiveness. Examples include the Indo-Pacific Economic Framework (IPEF) and the US-EU Trade and Technology Council. Republicans recognize IPEF to correct President Trump's strategic mistake of withdrawing from the Trans-Pacific Partnership. Speculation that Biden might turn to more ambitious trade negotiations amid domestic gridlock ignores key political trends. Progressive Democrats and Trump loyalists in the GOP alike view previous trade liberalization rounds as a driver of job and manufacturing losses to China in particular. While Democrats see a greater role for the state in protecting US workers and companies, Republicans want to protect the economic base of US national security. This leads to convergence around protectionist measures. The administration is doubling down on a ‘trade policy for the middle class’ driven by industrial policy incentives and reshoring efforts in an attempt to outcompete great power rivals. Trillion-dollar incentive packages like Biden’s infrastructure initiatives in his first two years in office are unlikely; instead, Congress will continue to insert ‘buy-American’ provisions into ongoing legislation and, possibly, even agree on bipartisan supply-chain measures motivated by shared opposition to China. Export controls will remain the US’ weapon of choice in intensifying great power competition. The administration is considering to follow up its recent export restrictions on semiconductors with further measures before the end of the year. These could include new curbs on products related to artificial intelligence and quantum computing as well as regulations on outbound US investments in critical technologies. The GOP’s China task force already promises a ‘laser-like focus’ on export controls and regulatory oversight of export licensing. This includes products and supply chains related to the IRA, namely electric vehicles, batteries, wind and solar technologies. Pharmaceuticals, space and satellite-related technologies, and cybersecurity technologies are other Republican priorities. While Congress cannot enact such measures by legislation, it will use the budget process and national security provisions to exert political pressure for executive action on export controls, safeguard measures, and more trade investigation. Congressional shaming of companies sponsoring this year’s Beijing Winter Olympics may also give business a preview of likely GOP tactics to highlight their China footprint. Strong bipartisan consensus on China and Russia holds, for now A clear Republican victory in the House and Senate would intensify the growing tension in US foreign policy between isolationism and a more internationally oriented stance. Trump’s ‘America First’ policies remain popular among Republican voters. Calls to limit aid to Ukraine are growing among prominent GOP members, who criticize NATO partners for not ‘pulling their weight’ on defense spending. Emergency aid packages to Ukraine will face more intense scrutiny in Congress. Other initiatives like the renewed negotiations of the Iran nuclear deal are unlikely to pass any Republican-held chamber. Instead, the GOP may intensify calls for prioritizing China at the expense of focusing on Europe. Overall, mainstream Republican foreign policy hawks and a strong bipartisan coalition backed by public opinion will keep any short-term action against NATO, aid to Ukraine, and other key international commitments in check. But the relative weight of Trump loyalists in the next Congress, debates in conservative media, and a potential Trump candidacy in 2024 could erode Republican support for internationalist US policy in the medium term. Strategic competition with China is the most important factor reinforcing bipartisanship in US politics. Both parties see China as the main competitor of the US. The administration will continue its hawkish strategy to reassert US leadership in the Indo-Pacific and try to pre-empt Republicans portraying it as ‘soft on China’. Biden will have opportunities to do so with IPEF, the Quadrilateral Security Dialogue with Indo-Pacific allies, the AUKUS cooperation with Australia and the UK, and as the host of the 2023 APEC Summit. However, a populist GOP’s disregard for international partners’ concerns would also undercut White House efforts to better coordinate with allies to contain China. It could demand largely symbolic but politically sensitive measures to support Taiwan, which would enrage Beijing. US global engagement in an era of great power competition continues to suffer from the past, present, and future shadow of ‘America First’. The Biden administration’s re-engagement with international partners resulted in largely successful damage control. Yet, allies and adversaries are well aware of the administration’s relative weakness at home. A potential return to ‘America First’ under Trump or one of his acolytes after 2024 limits the administration’s ability to rally countries that are hedging in America’s confrontation with Moscow and Beijing. Failures to coordinate with partners — from the IRA's ‘Buy American’ provisions and recent tech export controls to AUKUS and the Afghanistan withdrawal — have led some to question whether Biden’s ‘foreign policy for the middle class’ is merely a softer version of ‘America First’ in disguise. Facing a hostile Congress, a possible Trump resurgence, and a difficult economic outlook, the administration has few options to resolve these tensions in the near-term.

Agora Risikoreport Sonderedition Ausblick zweite Jahreshälfte: Krieg, Energieknappheit und Machtfragen in den USA und China sorgen für Volatilität

Agora Risikoreport Sonderedition Ausblick zweite Jahreshälfte: Krieg, Energieknappheit und Machtfragen in den USA und China sorgen für Volatilität

Agora Risikoreport Sonderedition Ausblick zweite Jahreshälfte: Krieg, Energieknappheit und Machtfragen in den USA und China sorgen für Volatilität

Agora Risikoreport Sonderedition Ausblick zweite Jahreshälfte: Krieg, Energieknappheit und Machtfragen in den USA und China sorgen für Volatilität

Mariel von Schumann has been elected as a new member of the Agora Strategy Supervisory Board Dr. Christoph Walther is leaving the Supervisory Board The experienced corporate strategist and former Siemens manager Mariel von Schumann has been elected to the supervisory board of the geopolitical strategy consultancy Agora Strategy at the Annual General Meeting with effect from 6 July 2022. "With Mariel von Schumann, we are strengthening the existing supervisory board, consisting of Prof. Dr. Kurt Lauk and Dr. Harald Braun, with a proven expert whose experience at the interface of geopolitics and business development has earned her an excellent reputation in the industry. With the growing need of our clients to integrate the complex geopolitical challenges into their business decisions, we are in a unique position with our consulting approach," says Dr. Timo Blenk, CEO of Agora Strategy. Mariel von Schumann is now a committed member of various supervisory boards. She previously held senior positions at Siemens AG, most recently as Chief of Staff to former CEO Joe Kaeser. In this role, she was responsible for the global strategic restructuring of the Siemens group as well as for Government Affairs and Investor Relations. "No entrepreneurial decision can be taken today without a precise analysis of the political influencing factors. Here, Agora Strategy's expertise and global network of more than 300 experts and their deep understanding of target markets create added value that cannot be provided internally. Topics range from security of supply, supply chain dynamics and international power shifts with implications for sanctions and trade relations to detailed scenario analyses. I look forward to bringing my strategic perspective and many years of management experience as a supervisory board member to Agora Strategy," says Mariel von Schumann. Mariel von Schumann succeeds Dr. Christoph Walther, who has held this position since the founding of Agora Strategy Group. Dr. Kurt Lauk, Chairman of the Supervisory Board, thanked him for his many years of support: "Dr. Walther has decisively supported the development of Agora Strategy Group into one of the leading European geopolitical strategy consultancies. On behalf of the entire Supervisory Board, I would like to expressly thank him for his extraordinary commitment." About Agora Strategy With its global network of experts, the Agora Strategy Group is a consultancy specialized in geopolitical risk analyses, business diplomacy and global political positioning strategies. The in-house think-tank, the Agora Strategy Institute, headed by former UN Ambassador Dr. Harald Braun, supports the comprehensive consultancy approach with tailored analyses and stimulates th

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