EDITORIAL: Democrat win not an end-all

The Democratic Party regained control of both chambers of the US Congress in last week’s midterm elections, which will put US President Donald Trump’s policies under greater scrutiny for the remaining two years of his term. Cost-of-living worries eroded support for Trump’s “make America great again” policies ahead of the elections, as the US president’s tariff strategy and his unpopular war with Iran led to a surge in living costs, becoming the biggest source of public discontent and a major reason for the Republican Party’s massive defeat.

Democratic control of Congress does not render Trump entirely a lame duck, as he still holds executive control, with trade, tariff and foreign policies likely to stay largely intact. The US president’s veto power could also constrain Democrats’ ability to enact new federal legislation unilaterally. However, the election outcome, along with pubic discontent over inflation, fuel prices, jobs and the interest-rate burden, might prompt Republicans to reassess existing policies, while opening the door for more pragmatic adjustments and bipartisan cooperation.

For tech-oriented Taiwan, the Democratic landslide has drawn attention because the victories of those who pushed for tighter regulations on artificial intelligence (AI) safety, data privacy, data-center construction and related areas could mean a slowdown of the AI boom, ultimately affecting Taiwanese companies’ investments in the US, local firms in the AI supply chain, Taiwan’s economic outlook and the local stock market’s performance.

Although the Trump administration has designated data center expansion as a national priority, most Americans oppose these power and water-intensive facilities. Rising concern about their effect on cost of living became a cross-party issue ahead of the elections, leading to construction delays or cancelations. Based on statistics compiled by Data Center Watch, a research project that tracks opposition to data center development across the US, 45 data center projects, valued at US$68 billion, were blocked or delayed in the second quarter. That followed 75 data center projects, worth US$130 billion, that were blocked or delayed in the first quarter.

Before the elections, 13 US states had implemented varying degrees of restrictions on data center construction, including permanent building bans, suspension of license issuance, data centers bearing the costs of rising community utility prices and grid upgrades, or decoupling data center electricity prices from residential electricity prices. Among the 36 governors-elect, 11 campaigned on halting new data center constructions and 19 supported intensifying regulation. There were also 41 local ballot measures related to data center construction in 10 states, according to Ballotpedia. As of Thursday last week, the results showed that up to 90 percent of voters supported restricting or banning data centers.

Speaking critically, AI demand and computing power supply are two different issues and should be treated separately. While the deployment of data centers, release of large language models and adoption of AI agents face growing calls for regulation, Democrats and Republicans are on the same page when it comes to AI-driven economic efficiency and US technological supremacy over China. AI demand remains and the Democrats’ sweeping victory should not be seen as a signal of a reversal in AI demand, but rather a potential slowdown in AI infrastructure investment due to more state and local regulations, longer permission timelines, higher development costs, and reduced investment incentives and tax breaks.

Furthermore, if public grievances over utility fee hikes, grid upgrades, environmental impact, corporate governance, and privacy protection and accountability for AI development can be effectively addressed, AI infrastructure investment would remain a focus of the US economy. The rationale is that if AI and data center buildout are driving economic growth and productivity, then regardless of which party is in power, there is no real reason to suppress such investments. Even as the implications of the midterm elections are being discussed, eyes are turning to the 2028 US presidential election and neither of the two parties can afford to see the AI industry collapse.

Taiwan’s government and businesses should closely observe changes in the political landscape in the US and assess the potential impact on future US investments, especially in Texas, where Democrat Gina Hinojosa ousted Republican incumbent Greg Abbott as governor. With no state corporate income tax, sufficient energy supplies and cheap land, coupled with generous incentives and subsidies, Texas has become one of the US states attracting large global tech companies, including those from Taiwan, to build data centers or establish operations there. Whether the state remains business-friendly under Hinojosa, the first Democrat to be elected governor of Texas, is worth observing.