Northeast Asia, Taiwan and Australia

Japan and South Korea secured tariff agreements in 2025 in return for investment commitments of $550 billion and $350 billion respectively, and both have spent 2026 negotiating how the funds will be deployed. Japanese Prime Minister Sanae Takaichi is entering her second year in office (The Guardian), and Seoul is negotiating with Washington over a nuclear-powered submarine program, uranium enrichment and spent-fuel reprocessing. Japan's chief cabinet secretary, Minoru Kihara, said the alliance "remains the cornerstone of Japan's foreign and security policy" regardless of the result (NPR).

The midterms leave these allies' core bargains with the executive. Congress has no role in the investment-fund terms, and Reuters reported that some Asian governments may now slow-walk pledges (Reuters). That creates a risk that Trump presses harder for disbursements before his leverage weakens further. A Democratic Congress is more likely to scrutinize Korea's nuclear-submarine and enrichment requests on non-proliferation grounds, and to support troop levels in Japan and Korea through the NDAA.

Taiwan's exposure is different. Taiwan's foreign ministry said it would deepen cooperation with the United States and that its policy toward Washington has always been non-partisan (Reuters). A proposed $14 billion arms package has not been formally notified, Trump has said he is holding it "in abeyance," and Rubio has said sales are "always balanced" against US needs (CRS). At home, the opposition-controlled Legislative Yuan passed a special defense budget capped at NT$780 billion and running to 2033 on 8 May, well short of the NT$1.25 trillion the government sought (Taipei Times; Focus Taiwan). Congress cannot force a notification, but a Democratic Senate Foreign Relations Committee can publicize the delay and legislate Taiwan support in the NDAA. The danger for Taipei is that Taiwan's arms timing and chip tariffs become trading chips at the Shenzhen summit. Under the US-Taiwan arrangement, Taiwanese chipmakers receive tariff-free quotas tied to US production, which ties TSMC's US investment to Section 232 policy.

Australia's AUKUS submarine program came through the Pentagon's review, which AUKUS proponents in Washington cite as proof the United States is moving "full steam ahead" (ABC News (Australia)); AUKUS has bipartisan support in Congress, which controls the funding and legal authorities for submarine transfers. North Korea's Kim Yo-jong said on 4 November that dialogue "is not surely equated with national interests for us," and the North fired multiple missiles toward the East Sea the same day (Yonhap; Yonhap). A constrained president has more reason to seek a summit with Kim, and Pyongyang has more reason to raise the price. For investors, the main regional market effect on 4 November was a sell-off in chip and AI stocks, with Kioxia down 5.4% and Taiwan's Taiex down 0.8% (AP).