The Trump Trainwreck

An iron rule of politics is that economic problems are bad for incumbents. A large, often decisive swath of voters will credit or blame the party in charge for economic conditions, and the worse it is, the more likely they are to “throw the bums out.” Donald Trump and the Republicans’ record of weak GDP growth, poor job creation, and higher inflation, especially in recent months, are among the reasons Democrats are favored to win at least one house of Congress in this November’s midterm elections.

In that, Democrats are getting help from an unlikely source, who presumably isn’t doing it on purpose: Donald Trump, in particular his foreign policy. Trump has made multiple entirely voluntary choices leading in foreseeable and foreseen ways to economic damage to the United States, including damage to states with close races that could decide control of the Senate.

The tariff debacle

The longest-running mistake is Trump’s tariff regime, enacted illegally by abusing emergency powers. Tariffs are taxes. They artificially raise prices for Americans while doing nothing to increase domestic manufacturing, even as voters say inflation and affordability are top concerns.

The volatility of Trump’s tariff declarations, along with his frequently unlawful changes to regulations, disregard for international agreements (even ones he signed), plus his regime’s corruption and attacks on the rule of law inject damaging uncertainty into the economy. More uncertainty usually makes businesses hesitate to invest. It’s not a wonder that foreign direct investment is down over 17%, and domestic business investment is lagging in everything besides AI and data centers.

The Trump regime’s economic mismanagement has so spooked bond investors that U.S. borrowing costs have risen, with 30-year Treasury bond yields reaching levels not seen since 2007. Among the reasons are investor expectations of higher inflation, concern about a high annual deficit and record federal debt levels, and lower confidence in the U.S. government. The U.S. Treasury was concerned enough to announce a bond buyback, and it calmed the market for only a day or two. That means the government has to spend billions more each year on debt service, which translates into higher borrowing costs for ordinary people throughout the economy.

The Iran boondoggle

Another out-of-control Trump problem is the Iran war. The global supply crunch caused by Iran blocking the Strait of Hormuz—affecting oil, natural gas, fertilizer, helium, and more—is raising prices everywhere. In March, right after Trump attacked Iran, the annualized U.S. inflation rate leapt from 2.4% to 3.3%. It’s been that or higher each month since. For comparison, U.S. inflation in 2024 was 2.9%, and it trended down that year, while this year the line slopes up.

Amazingly, Trump had an out, a way to contain the damage and give the economy a few months to build positive momentum ahead of the midterms: the Memorandum of Understanding (MOU). Signed on June 17, the U.S.-Iran MOU was basically American surrender, punting all U.S. war demands to future negotiations, giving Iran immediate economic benefits, and accepting language indicating Iran will control the Strait of Hormuz, which had been fully open before the war.

But markets loved it. By the end of June, the price of oil had fallen back near where it was before the war. American voters experience the oil market most directly in gas prices, which had risen through most of spring but noticeably eased by the July 4 holiday. June’s annualized inflation rate was 3.5%, still elevated, but a big improvement from May’s 4.2%. Shipping traffic through Hormuz increased, reaching about half of pre-war levels. Economically, at least, things were looking up.

Except Trump started violating MOU provisions almost immediately. The U.S. acted like the Hormuz parts didn’t count; Iran shot at ships to assert control. Trump reacted by bombing Iran again, Iran responded by blocking Hormuz and attacking countries that host U.S. bases (again), and the U.S. bombing ended in failure for basically the same reason as the last round. It deepened the U.S. munitions shortage and Iran emerged in a yet stronger position.

Fighting extended into Saudi Arabia and Yemen, with the Iran-backed Houthis firing at Red Sea shipping, adding to the global supply crunch. Oil prices are up over 25% from the MOU low, and gas prices are up with them. The war is back in a damaging stasis, with Iran blocking Hormuz and the U.S. blockading Iran. The Trump regime’s response to this is to declare an “economic D-Day”—as if that will break the Iranians where thousands of bombs couldn’t—and to pressure other countries into sanctioning Iran, which China and others have already rejected. So now Trump has to impose economic punishment on various countries for not helping him with Iran, further harming the U.S. economy, or weakly back off threats (again) while swallowing more failure in the war he started.

The Iranians are aware of America’s political calendar. They can see the polls showing that the war is unpopular and Trump’s approval rating is down in the 30s. They think his word is worthless, since he lies so much and reneged on multiple agreements. Iran has strong incentives to drag out the confrontation past the midterms, let economic damage accumulate, then tangle with a politically weakened U.S. president.

The Canada betrayal

Reeling from their evident loss in the Iran war, the Trump regime started a trade war with Canada. They first picked the fight early in Trump’s current term, with the U.S. imposing tariffs and demanding new negotiations. Meanwhile, Trump denigrates Canada, and in the joking (not really joking) style of an abusive internet troll, threatens Canada with annexation as the “51st state.” It escalated dramatically this week, as trade talks broke down, with Canada walking away, accusing the U.S. of unreasonable late demands. The U.S. is imposing tariffs on $20 billion worth of Canadian goods, and Canada vows retaliation of equal value by September 7.

The U.S.-Canada trade arrangement Trump says is so awful is the USMCA, the deal he negotiated in his first term to replace NAFTA. Based on that, Trump’s rhetoric, and U.S. negotiators’ behavior, Prime Minister Mark Carney said the U.S. signature is “written in pencil.” He also said Canada was attacked, comparing U.S. efforts to an act of war. 

Trump has given Iran and Canada—of all countries!—a shared interest in weakening the U.S. economy ahead of the midterms in the hope of undermining U.S. aggression.

The midterm showdown

Of the six close races likely to decide control of the Senate, three states border and trade heavily with Canada: Alaska, Michigan, and Maine. Trump is hurting the economies of, and influential interests in, states his party needs to keep partial control of Congress, all to try to bully one of America’s most valuable allies. He is only leaving the U.S. poorer and weaker.

Trump has been denying voters’ affordability concerns, but he does seem to recognize that rising prices are a political problem for him, not least because he campaigned on lowering prices. So Trump announced special measures to allow more cheap imported beef, which he said would be sold at 25% less than market prices, without identifying any sources.

Maybe this ends up lowering beef prices for consumers (we’ll see), but it already angered the American cattle industry. They face higher feed costs due to the Iran war raising the price of fertilizer and diesel, higher input costs and closed off markets from the trade war with Canada, and higher labor costs due to Trump’s harsh anti-immigrant policies—and now the president is helping foreign producers undercut them.

Iowa and Texas also have competitive Senate races, and Kansas’s is surprisingly close. Those  are three of the top beef-producing states in the U.S.

Trump won all six of these states in 2024, along with two others where Democrats are trying to win Senate seats: North Carolina and Ohio. Democrats need to flip at least four of those to take the Senate, plus retain a Senate seat from Georgia, which Trump also won. Who knows if Trump-caused economic damage will push any of these races over the edge, but it doesn’t make things easier for Republican candidates.

The Trump regime has done a lot of damage to American democracy. The president and his family members solicit bribes, do insider trading, and have massive financial conflicts of interest, dwarfing any previous corruption in U.S. history. The White House has transformed the Justice Department’s mission from impartial federal law enforcement into personal defense and political enemy persecution, usurped Congress’s power of the purse, conducted politicized purges of military officers, and unleashed ICE as a violent, thuggish secret police. They’ve tried to steal the midterms, aiming to maintain Republican majorities in Congress via gerrymandering, disenfranchisement, voting restrictions, and lies about fraud.

But it’s not going to work. The American electoral process is too ingrained and too distributed. Antidemocratic manipulations could tip a very close race, but not overcome a larger loss. Republicans didn’t get enough 2020 conspiracy theorists into positions overseeing election administration. Trump didn’t get the vote-suppressing “SAVE Act” through Congress. He doesn’t have the institutional control nor the popularity to pull it off, in part due to the backlash he engendered by picking stupid foreign fights and damaging the U.S. economy.

The regime’s desire for authoritarianism is bottomless, but their competence and capacity to carry it out is not. The strategic move would’ve been to throw money at the economy, especially supporters, while consolidating institutional control. Save most of the corruption and foreign aggression until after you’ve got enough power to repress or ignore public opposition.

As bad as America’s democratic backsliding is, at least we didn’t get smarter fascists.

Featured image is "Accident ferroviaire de la gare Montparnasse," 1895.