Trump will face a Democratic-controlled Congress from January, raising the risk
of prolonged policy gridlock and intensified investigations or impeachment, but
also increasing pressure for bipartisan deals with direct market impact. Looming
deadlines to avoid a debt default or government shutdown could force compromises
that include repealing the debt ceiling, boosting defense and domestic agency
spending, extending Affordable Care Act (ACA) subsidies, capping prescriptions
drug prices and approving trade agreements to lower tariffs that have pushed up
inflation. Washington veterans point to precedent: budget and debt deadlines
during Trump’s first term and the Democratic House’s role in advancing the USMCA
in 2019.
