High costs after tariffs pose threat to Trump and GOP

Yahoo

3 days ago

The cost of living in America is projected to rise because of President Trump's latest round of tariffs and that's a political problem for the president and Republican lawmakers in Washington, who campaigned in 2024 on bringing down the cost of groceries and other staples, a message that resonated strongly with voters.
More than six months into Trump's second term, however, the costs of groceries, and other essential goods, such as cars, have continued to rise, corresponding with a drop in Trump's job approval rating and a souring public view of Trump's handling of the economy.
The cost of even 'cheap' eats has become fodder for debate on social media, as people grumble about everything from the price of McDonald's hash browns to Coca-Cola.
The price of eggs has come down in recent months, but a dozen are still, on average, 64 cents more expensive than a year ago, while the price of chicken, ground beef and orange juice were more expensive last month compared to a year ago.
While inflation as measured by the Consumer Price Index has stabilized at 2.7 percent, policymakers fear the prices of goods and services could spike up again, which is a big reason the Federal Reserve is hesitant to cut interest rates, a major point of tension between Fed Chair Jerome Powell and Trump.
Trump's tariffs are expected to put upward pressure on costs. Experts project that higher fees on goods from Canada, the European Union, Japan, South Korea, Vietnam and other major trading partners could cost the average family of four an additional $2,400 or more in annual expenses.
A Republican strategist who requested anonymity said Republicans need to be careful that inflation and costs don't become an anchor on their candidates in next year's election.
'That's why Trump's beating that Fed rate cut like a dead horse,' the strategist quipped, referring to the immense pressure the president has put on the Fed to cut rates.
The strategist explained that while spurring the economy by making money cheaper to borrow might increase inflation over the long term, it will give voters a sense that the economy and their income-earning ability is on the rise.
Vin Weber, a Republican strategist and former member of the House GOP leadership, said while some voters might hope to see prices come down, he warned that is extremely difficult for any president to accomplish.
'I think that we've made a mistake as Republicans a little bit, in talking about bringing down costs. Bringing an end to inflation but actually reducing prices is a lot more difficult,' he said.
'We can do that with some things, like certain commodities like gasoline. But broadly speaking, to say we're going to bring down prices, it's very, very difficult and not necessarily desirable. In traditional economic terms, prices coming down is deflation and is usually identified with a recession,' he said.
Republican strategists say the 'jury is still out' on what the economy will look like a year from now when the battle for control of Congress heats up, but they warn that Republicans' political fortunes will ride on how voters view their own ability to keep up in a world that gets more expensive every month.
'The two most important reasons why Donald Trump won the presidency in 2024 were to bring down inflation and juice the economy. The progress on those two efforts will go a long way toward determining the president's job approval and the fortunes of Republicans going forward,' said Whit Ayres, a leading Republican pollster.
'There's been a tremendous amount of attention paid to the [Jeffrey] Epstein case, but progress on inflation and economic growth will be far more important than the Epstein case to the vast majority of Americans,' he added.
Ayres said that polls show voters increasingly view the economy as Trump's economy, a perception that took hold after Trump announced sweeping reciprocal tariffs on most countries on April 2, 'Liberation Day.'
'Polls show increasingly that the status of the economy is due to policies adopted during the Trump administration rather than those adopted in the Biden administration. That has been the case ever since Liberation Day on April 2 with the tariff announcement,' he said.
A Gallup poll of 1,002 adults nationwide last month found that Trump's job approval rating has dipped to 37 percent and that his approval rating on the economy has dropped from 41 percent in March to 37 percent last month.
A University of Massachusetts Amherst poll of 1,000 respondents conducted from July 25-30 also found Trump with a 38 percent job approval rating and a 58 percent disapproval rating. Respondents in that poll gave Trump a 37 percent approval rating on 'jobs' and a 31 percent approval rating on 'tariffs.'
That has Republican lawmakers on Capitol Hill feeling nervous about the latest round of tariffs Trump imposed on foreign trading partners last week.
A new analysis by the Yale Budget Lab projects Trump's tariffs could increase prices by 1.8 percent in the short term and cost the average American household $2,400 a year. The nonpartisan research group calculates that consumers face an average effective tariff rate of 18.6 percent, the highest since 1933.
This has some Republicans in Congress worried about a political backlash.
Sen. Josh Hawley (R-Mo.) late last month unveiled a proposal to send a $600 rebate check to every American — man, woman and child — to help offset higher costs from tariffs. His bill would allow for higher rebates if tariff revenues exceed projections.
A family of four would receive $2,400 in economic assistance under his plan.
Sen. Rand Paul (R-Ky.) warned colleagues in April that the enactment of the 1930 Smoot-Hawley act, which raised tariffs substantially, led to the defeat of the Republican authors of the legislation in the 1932 election, and lost Republicans control of Congress for decades.
'The economics of tariffs are bad, the politics, if anything, are worse,' he warned at the time.
Congressional Democrats, who are struggling with their own dismal job approval ratings, see the high costs of daily living as an issue that can help them win back control of the Senate and House.
Senate Democratic Leader Chuck Schumer (N.Y.) traveled across upstate New York on Tuesday to highlight how the administration is raising costs and hurting the economy.
Appearing at an event in Niagara Falls, he called Trump's 35 percent tariff rate on Canada 'destructive' and tariffs more generally as 'a dagger aimed at the heart of Upstate New York.'
Democrats are hoping to flip several Republican-held seats in New York, and state lawmakers are discussing legislation to allow New York to redraw its congressional lines mid-decade.
A group of Democratic senators from New England sent a letter to Environmental Protection Agency Administrator Lee Zeldin on Thursday slamming him over rising energy prices after Trump signed into law the One Big, Beautiful Bill Act, which drastically cut tax incentives for renewable energy.
'While energy demand surges, your policies are strangling America's cheapest and quickest-to-deploy sources of energy — solar and wind — by hiking costs, creating insurmountable permitting hurdles and injecting uncertainty into the market,' they wrote.
The signatories included Sens. Ed Markey (D-Mass.), Sheldon Whitehouse (D-R.I.), Jeanne Shaheen (D-N.H.), Richard Blumenthal (D-Conn.), and Angus King (Maine), an independent who caucuses with Democrats.
Ron Bonjean, a GOP strategist and former Senate and House leadership aide, said 'voters vote with their wallets and that's why they voted Trump in.'
But he questioned whether Democrats will have credibility on the issue of the economy and inflation after voters came away from Biden's four years in office with a strongly negative view of his handling of those issues.
'The Democrats are having a really difficult time seizing on a number of opportunities because they lack the organization and the message,' he said. 'They just seem so disorganized.
'We're 15 months out' from the election and 'while historically the Republicans would likely lose the House, it doesn't feel that way. It feels it could go in any direction,' he added.
'We'll see what the economy is looking like a few months before the election,' Bonjean said.
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