The economy was the Republicans’ best argument to hold off a blue wave, but kept presidential protectionist promises could change that.
Over the course of the last few months, as Republican strategists contemplated a challenging midterm cycle, they thought they knew what was their greatest strength and their greatest weakness. Their main asset was a strong economy in which business optimism, rising wages, and a booming stock market were the result of President Trump’s regulatory rollback and the tax-reform bill passed by GOP congressional majorities. Their biggest difficulty was the notion of an administration in a constant state of chaos. President Trump’s use of his Twitter account to attack foes has engendered a never-ending stream of negative stories distracting the nation from good news about the economy.
That presented Republicans with a unique problem in which James Carville’s classic rule advising us that the answer to the question of what decides elections — “the economy, stupid” — might no longer be true. If, in the age of social media, artificial crises determined by Trump’s loose lips and Twitter account were now more important than economic data, then the usual downturn for the party in power might grow into a blue wave.
While it was possible that the rising tide of the economy might overwhelm the narrative — of Trump incompetence, chaos, and Russia collusion — that was weaponized by a mainstream media eager to aid the “resistance,” Republicans have been confronted by a new problem that was, if anything, just as daunting. If President Trump’s tariffs and the Chinese retaliation that followed ignite a trade war, that could turn the good news about the economy into a tale of woe just in time to sink any hopes the GOP might still have to hold onto the House of Representatives or to add to their Senate majority.
The arguments for Trump’s tariffs rest on the idea that keeping campaign promises and measures designed to aid the rust-belt working class are, as they were in 2016, the key to Republican victory. A belief in protectionism and the notion that unfair trade deals have hamstrung the U.S. economy for decades are among Trump’s most deeply held and sincere beliefs. No one can deny that he ran on this issue and that it resonated with working-class voters in the states that handed him an upset victory in 2016. Standing up to China and other nations that dump cheap goods in the U.S. and enact tariffs that increase the price of American products abroad is both popular and at the heart of Trump’s “America First” mentality.
Trump believes that by taking on China he’s correcting decades of U.S. trade policy that put the interests of large corporations above those of American workers — especially those in labor-intensive industries who lost their jobs in a fast-changing global economy. His confidence in his ability to face down opponents with superior negotiating skills is unlimited and has led him to believe that any trade wars generated by U.S. measures designed to protect American jobs will be easily won. Trump loyalists also believe that even if the conflict continues to escalate following Beijing’s decision to impose massive penalties on the sale of American goods, it is the brittle Chinese economy that has the most to lose if the clash intensifies.
The truth of that assumption has yet to be determined, but any optimism about such a scenario must be tempered by the fact that the Chinese seem to have just as much confidence in their ability to throw their considerable economic weight around in response to Trump’s strategy. For all of the president’s bravado, history teaches us that trade wars don’t generally produce winners but rather hurt all those involved. The Chinese retaliatory measures seem designed to bring home this point to the administration, as they target precisely those industries that are linked to states Trump carried.
That means that while Trump’s base may cheer his protectionist rhetoric and still have faith in their leader’s ability to prevail in the long run, it is working-class voters who embraced his candidacy who are going to be hurt by the tariff tit-for-tat. Chinese surcharges on automobiles, chemicals, aircraft, and televisions will hurt many Americans. But manufacturers who export to China are also not the only ones to feel the pinch. Tariffs on corn and pork have now been followed by further retaliation against soybeans. This means that farmers will experience even more problems, possibly undermining their support for Republicans.
The issue here for the administration is not so much the specific pain various sectors of the economy or regions will feel as the U.S. stands its ground against China. The problem is the very real possibility that the sense of anxiety felt by both companies and investors about protectionism will translate into a decline in the optimism that has fueled the Trump boom. Though the business community has been profoundly encouraged by Trump’s rollback of the Obama administration’s excessive regulations as well as by the prospect of tax cuts, a trade war could put an end to the idea of a prolonged upturn in the economy. Wherever the chips ultimately fall in Trump’s exchange of body blows with the Chinese, it is the perception that the conflict will drag the country down that is the GOP’s true Achilles heel.
The business community has been encouraged by Trump’s rollback of the Obama administration’s excessive regulations as well as by the prospect of tax cuts, but a trade war could put an end to the idea of a prolonged upturn in the economy.
Even if Trump were determined to play it safe rather than roll the dice on the idea that a protectionist power play will advance the country’s interests in the long run, Republicans already faced an uphill struggle in November. So long as they can argue that a White House and a Congress in their hands had brought the country prosperity, the GOP stood a chance of holding its own in the midterms. But to Republicans who fall to Democratic challengers, it won’t matter who ultimately wins Trump’s trade war if it ends the atmosphere of business confidence that has led to a combination of increased investment and higher wages.
Trump may cherish the opportunity to keep his promise about protectionism and to land some blows against the Chinese. But whatever satisfaction he may take in that effort, he should be sobered by the very real chance that his decision will put Nancy Pelosi back in the speaker’s chair and set in motion impeachment proceedings pushed by triumphant and vengeful Democrats. Stepping back from the brink of an all-out war with the Chinese may not just be good economic policy for a nation that is now more dependent on overseas trade than it is on traditional smokestack industries that Trump has championed. It also may be a matter of his and his party’s political survival.