US midterms carry warnings for Australia on living costs, fuel prices and datacentres
Democrats have won control of the US Congress in the midterm elections, and analysts say the result will affect Australia's relationship with Washington, including Aukus, datacentres and China. Experts also see warnings for Canberra in the cost-of-living and fuel price pressures that shaped the vote.
The Democratic Party has taken control of the US Congress in this week's midterm elections, badly weakening the outlook for President Donald Trump's final two years in office. Australian cabinet ministers, diplomats and the defence industry watched closely, because the shift in Washington's balance of power could affect Australia's alliance with the US, the Aukus security pact, datacentre development and relations with China. Analysts say the issues that drove the vote, including living costs, fuel prices and datacentres, are also live in Australia.
Cost of living and the Iran war
Bruce Wolpe, a senior fellow at the United States Studies Centre, said cost-of-living pressure had undermined Trump's ability to rile up voters. He argued the Albanese government was taking a hit from the economic fallout of the Iran war, and that people were uncertain how it would end. Elliot Clarke, head of international economics at Westpac, said the results had changed the atmosphere around the Middle East conflict. Brent crude, which had threatened to pass its April peak, has instead fallen by 20%. Clarke said greater confidence in a resolution would help curb inflation and let central banks hold back on rate hikes.
Coalition frontbencher Andrew Hastie said people feel worse off after tariffs and the war in Iran.
The future of the alliance
Arthur Sinodinos, a former Australian ambassador to Washington, said Congress might press the administration to support Ukraine, and that China may feel emboldened, though he did not expect sudden action on Taiwan. Ed Husic, the former industry minister, urged a reset of the relationship with the Trump administration. Abe Denmark, a partner at The Asia Group and an architect of the Aukus agreement in the Biden administration, warned that Canberra must distinguish political positioning from durable policy as power in Washington becomes more dispersed.
A warning on datacentres
Husic pointed to possible changes in US AI regulation. Greens senator Sarah Hanson-Young noted that datacentre hotspots such as Texas, Georgia and Ohio had shifted towards the Democrats. Acting prime minister Richard Marles said datacentres need a social licence and should not be built in suburbs.
