Trump's second term policies raise economic alarms with 6 months to midterms

President Trump’s shift from first-term pragmatism toward a more rigid ideology is creating economic headwinds and jeopardizing Republican control of Congress in the upcoming midterm elections.

President Donald Trump’s second-term pivot to aggressive tariffs and a prolonged conflict with Iran is fueling inflation and voter anxiety, with his approval rating at 37 percent just six months before a critical midterm election that could upend his presidency.

"What we have now is what happens when the pragmatism has gone and the ideas are awful," Gerard Baker, Editor at Large for The Wall Street Journal, wrote in a May 5 column, criticizing the president's embrace of tariffs and "regime-change" in Iran.

The economic fallout is souring the political landscape for Republicans, with prediction market Polymarket giving Democrats an 84 percent chance of reclaiming the House and a 51 percent chance of winning the Senate. The unpopular war is contributing to rising gas prices, while tariffs are adding to inflationary pressures, according to analysts.

At stake is the final two years of the Trump presidency. A Democratic-controlled House could launch investigations into the administration's war powers, family business dealings, and pressure on the Federal Reserve, effectively stalling the president's agenda ahead of the 2028 election.

Baker's column argues Mr. Trump has abandoned the practical, business-first approach that characterized his first term. He contrasts the current "faith-based exercise" in Iran with the more targeted military actions of his first term and laments the shift from targeted tariffs to a broader, "ruinous" trade policy.

History is not on the president's side. In 18 of the last 20 midterm elections since 1946, the party holding the White House has lost seats in the House of Representatives. With an approval rating below 40 percent, Republican losses are almost a certainty, echoing the challenges faced by previous administrations.

Democrats Lack Coherent Message

Despite the president's low approval, Democrats face their own challenges. The party lacks a clear leader or a unified message beyond opposing Trump. There is still internal debate over why Vice President Kamala Harris lost the 2024 election, and while figures like California Governor Gavin Newsom and Texas Senate candidate James Talarico are emerging, no frontrunner for 2028 has been established.

The Redistricting Battlefield

Both parties are engaged in an aggressive "redistricting arms race" to redraw congressional maps in their favor. A recent Supreme Court decision weakening the Voting Rights Act has intensified Republican efforts, though the ultimate impact on the November elections remains unclear amid numerous legal challenges. The strategy could backfire if parties spread their voters too thinly, turning previously safe seats into competitive battlegrounds.

This article is for informational purposes only and does not constitute investment advice.