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DEVELOPING COUNTRIES have spent two years learning a bloody expensive lesson: decisions in Washington can wreck their economies long before American voters feel the consequences. Donald Trump’s tariffs have disrupted trade. His administration’s foreign-aid cuts have gutted programmes poorer countries relied on. The war with Iran has jacked up energy costs. On November 3rd American voters delivered a humiliating rebuke to the Republicans who backed his agenda.
Democrats captured both chambers of Congress, flipping Republican-held seats across states that had supported Trump in 2024. The result hands them control of federal spending and congressional oversight from January. It also makes the final two years of Trump’s presidency a lot difficult to manage. For developing countries, the implications matter. Exaggerating them would be a dumb mistake.
The first is trade. Countries such as Bangladesh, Vietnam, India and Cambodia have spent months bending over backwards for American tariffs and the threat of fresh duties. Exporters cannot plan factories or sign long-term supply contracts when access to their biggest consumer market hinges on decisions from the White House. A Democratic Congress can investigate the economic carnage caused by tariffs and push legislation to claw back some of Congress’s authority over trade. It can also make tariff policy a political liability for Republicans ahead of the 2028 presidential election.
Exporters should still resist cracking open the champagne. The president retains enormous executive authority over tariffs, and Democrats lack the votes to override a veto. A congressional hearing will expose the cost of trade restrictions; it will rarely persuade a president who treats tariffs as a negotiating weapon to abandon them. Companies should keep diversifying markets and supply chains rather than build business plans around an American policy reversal that may never arrive.
Foreign aid offers a more urgent test. The Trump administration dismantled much of the old USAID system and slashed funding for programmes across the developing world. The consequences have gutted public-health projects, food assistance and organisations supporting vulnerable communities. Democratic lawmakers have called for restoring parts of the aid apparatus. Their control of appropriations gives them a route to pump money back into selected programmes.
A return to the old model will prove messy. The administration controls the agencies responsible for implementing policy, while much of the institutional damage will take years to reverse. Democrats may prioritise emergency relief and programmes with clear domestic benefits, rather than recreate the sprawling aid system that existed before Trump. Governments hooked on American assistance should hunt for alternative funding and strengthen their own budget capacity. Waiting for Washington to restore yesterday’s programmes is a piss-poor development strategy.
The war with Iran presents a more direct economic worry. Higher oil prices batter import-dependent economies hardest. For countries such as Nepal, Pakistan and Sri Lanka, an expensive energy bill means pressure on foreign-exchange reserves and less money available for domestic investment. A Democratic Congress can scrutinise the war’s cost and use budget negotiations to challenge its financing. It can also investigate the administration’s decisions. Trump, however, remains commander-in-chief and retains considerable authority over military operations.
The election may therefore shrink the political room for escalation without guaranteeing an end to the conflict. Oil-importing countries should keep preparing for volatile prices, protecting vulnerable households through targeted support and avoiding expensive subsidies that rot public finances.
There is also a longer-term question about China. Some governments may hope a weakened Trump makes Washington a more predictable partner. That could happen in certain areas, especially trade and diplomacy. Competition with China, however, enjoys support across both American parties. Democratic lawmakers are likely to scrutinise Chinese investment in strategic infrastructure and technology. Countries that have borrowed from Beijing or welcomed Chinese-backed projects could face continued pressure to explain the terms of those deals.
For smaller states, the practical response is to preserve room for manoeuvre. Nepal, for example, needs American support for development and trade while relying heavily on India for transit and China for infrastructure finance. Its interests are served by keeping all three relationships functional. The same reasoning applies to African governments balancing Western aid against Chinese investment.
The election also matters for migration. Trump’s restrictive approach has made life difficult for foreign workers and students seeking access to America. Democrats can use oversight and legislation to challenge parts of the administration’s immigration policy. Yet border enforcement and visa decisions are heavily influenced by the executive branch. Migrant-sending economies should expect continued uncertainty rather than a rapid reopening of American doors.
The broader message is that American voters have placed a check on Trump’s power, rather than removed him from office. Democrats will control the committees and the purse strings. The president will retain the veto and much of his authority over foreign policy. The result is likely to produce more scrutiny and political friction in Washington, with occasional changes in policy where Congress can secure agreement.
For developing countries, the useful lesson is practical. Keep trade exposure diversified. Build fiscal reserves against energy shocks. Replace aid dependence with more reliable domestic funding where possible. And avoid treating any American election as a substitute for sound economic policy at home.
The Republican wipeout has made Washington less pleasing for Trump. It has yet to make it predictable for the rest of the world. ■
