Trump's war policies backfire as Democrats take Senate in 2026 midterms

It turns out that launching a conflict is not a winning strategy with voters, especially when American households are feeling the economic squeeze. President Trump is now experiencing the political consequences of his own decisions.

The 2026 midterm elections are delivering a sobering message for Trump. Democrats have secured Senate control and are approaching a House majority, propelled by a wave of support. They have flipped Senate seats in traditionally Republican states such as Texas, South Carolina, and Ohio.

The political situation can be explained in simple terms.

Trump remains in the presidency for two more years. However, he will lose the cooperative Congress that advanced his agenda during the first two years. If Democrats also win the House, the final two years could see significant legislative gridlock.

What caused Trump's political decline?

His earlier trade and tariff disputes had already made him unpopular. The US military engagement with Iran appears to have been the decisive factor for many voters.

Exit polls indicate that a majority of voters believe the attack on Iran was wrong. The subsequent rise in energy prices added to the burden on households already dealing with high living costs. The conflict deepened existing dissatisfaction with the economy.

The Middle East situation is now the most critical factor to monitor. With Trump facing political embarrassment at home, he may either escalate his aggressive stance or be checked by Congress pushing for de-escalation. This will be key for oil prices and bond yields.

On Wall Street, the election focus has moved to a different issue: increasing opposition to artificial intelligence and data centres.

Data centre construction became a campaign issue due to voter concerns about electricity costs, infrastructure demands, and AI's societal impact.

Tech investors now face difficult questions about whether the massive AI infrastructure spending boom will encounter greater political resistance. The timing is inopportune, as markets have been nervous recently, questioning if the heavy spending can deliver returns. This creates a dilemma where both action and inaction carry risks.

Nasdaq futures are currently down 0.7%, after being more than 2% lower earlier in the day. The recovery is positive, but it is too early to interpret it as a definitive signal.

Tech shares remain the obvious pressure point amid political uncertainty, AI spending worries, and potential tighter scrutiny on data centre expansion. While that is the immediate focus, the resolution of the Iran conflict will ultimately determine the direction of broader markets.