US midterms may raise shutdown, debt risks; keep tariff uncertainty high: ICICI Bank

New Delhi: The US midterm elections could increase the risk of a government shutdown and a standoff over the country's debt ceiling, while keeping businesses exposed to uncertainty over trade and tariff policies, even as a major shift in President Donald Trump's policy direction remains unlikely, according to a report by ICICI Bank.

The report said Democrats have a 63 per cent probability of gaining control of both chambers of Congress, with their chances of winning the House of Representatives at 90.9 per cent and the Senate at 64 per cent.

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A Democratic sweep could lead to greater scrutiny of the Trump administration's policies, particularly on tariffs, immigration and government spending. However, ICICI Bank said a change in control of Congress was unlikely to automatically dismantle the existing tariff framework.

"The more immediate effects of Democratic control would likely be increased oversight, legislative disputes and greater uncertainty for businesses, rather than an automatic dismantling of the current tariff framework," the report said.

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Democrats could push for a review of some tariffs or seek to limit the President's ability to impose them. However, any major change may be difficult because the President can veto legislation and retain certain powers to impose tariffs.

The report noted that the election outcome was also unlikely to affect investments in AI and data centres significantly.

"The toss-up states where Republicans can lose in the midterm collectively account for only ~15% of total data center capacity in the US", the report said, potentially limiting the extent to which a change in political control could affect the sector.

Democrats have also raised concerns over the high electricity and water consumption of data centres. An average data centre with a capacity of 100 megawatts uses around 2 million litres of water daily and consumes more electricity than 75,000 homes, the report said. The sector could also face greater scrutiny over its environmental impact and effect on employment.

However, the report said a Democratic sweep was unlikely to change the course of the West Asia conflict. While Democrats could increase scrutiny of the administration's military actions and make it harder to secure funding through Congress, ICICI Bank said this was unlikely to immediately stop the war.

Government funding could pose a more immediate risk. If Democrats gain control of one or both chambers of Congress, differences over spending priorities could make it harder for the President and lawmakers to agree on government funding, raising the possibility of a shutdown.

The current temporary funding arrangement, which allows the government to continue operating without a full-year budget, expires on December 11, 2026. ICICI Bank said there was a moderate possibility of a partial government shutdown in late 2026 and 2027.

The report also warned of a possible dispute over the US debt ceiling -the legal limit on how much the federal government can borrow- in mid-2027. US debt stood at around USD 40 trillion in late 2026, against a borrowing limit of USD 41.1 trillion.

If lawmakers fail to agree on raising or suspending the limit, the government could face difficulties meeting its financial obligations, potentially putting pressure on the country's credit rating.

On immigration, the report does not expect a major policy change, noting that the Immigration and Customs Enforcement (ICE) and Border Patrol have received USD 70 billion in funding for the remainder of Trump's term.

ICICI Bank said the broader economic and geopolitical situation would have a greater influence on financial markets than the midterm election outcome.