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Edited by: Brady Africk and Hannah Bowen

Happy Thursday! In today’s newsletter, we examine Donald Trump’s new tariff policies and trade deals, the Democratic Party’s favorability among voters, and the upcoming midterm elections for Congress.

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1. Trump's Lopsided Trade Deals

Topline: Last week, President Trump announced increased tariffs on around 70 countries. While managing to strike deals with major trading partners like the EU and Japan, other trading partners like Canada found themselves facing tariff rates above the average 15 percent placed on other countries. AEI’s Michael Strain observes that Trump’s recent trade deals appear one-sided, favoring the US and leaving our trade partners with the short end of the stick.

One-sided Trade: These deals reflect two things, Strain notes:

• President Trump is willing to impose more economic harm on the US through his tariffs than other countries are willing to impose on their own economies.
• The EU is willing to face higher tariffs in order to maintain US support for NATO, but Trump’s lack of interest in the security alliance is a dangerous concern.

Consequences: Tariffs will not revive US manufacturing employment, but they will raise consumer prices and reduce US producers’ competitiveness. Despite these challenges, Strain asserts that the US will likely avoid the inflation levels seen during Joe Biden’s presidency. However, if Trump maintains his aggressive tariff policies, the US is likely to face higher unemployment, slower economic growth, and lower real incomes, among other negative economic impacts.

“The U.S. will likely avoid Joe Biden–level inflation and a recession. But avoiding those outcomes is a low bar for success.”—Michael Strain

2. Democrats Fall Short in Favorability

Topline: Few things are less effective than Democrats’ loud disapproval of President Trump and his administration, AEI’s Ruy Teixeira writes. The Democratic Party’s disdain for President Trump and his policies is nothing new, but the effectiveness of the repetitive messaging of resistance to Donald Trump has proven ineffective in changing the Democratic Party’s tarnished brand.

Poll Problems: A recent Wall Street Journal poll finds that Democratic Party favorability remains poor, with Democrats facing their worst results in 35 years. Voters still trust congressional Republicans over their Democratic counterparts on several top issues, including illegal immigration, the economy, foreign policy, and handling the Russia-Ukraine War. The difference in favorability toward each party ranges across these issues, with Republicans in Congress holding a 17 percent lead on illegal immigration and a more modest 5 percent lead on the Russia-Ukraine war.

Dems Need a New Message: Despite concerns over Trump and the current GOP’s approach to US policy, voters believe that Democrats are unlikely to do much better. The Democratic Party’s continual push of the same political message has not improved its standing with voters, nor has it increased public trust in the party. Teixeira argues that the Democratic Party can only succeed when it shows voters that it can pivot away from exclusively focusing on scandal and outrage in the Trump administration. However, as Teixeira notes, doing so would require a difficult break from the material and ideological interests of many on the left.

“That’s the hard work that needs to happen. And that work may become even harder after 2026 when, as seems likely, Democrats take back the House in a normal thermostatic reaction against the incumbent party. That will breed complacency and convince #Resistance aficionados that nothing really needs to change other than turning up the volume even higher—[Cory] Booker, Jasmine Crockett, JB Pritzker, and hundreds of other Democratic pols will be more than happy to oblige.”—Ruy Teixeira

3. Midterm Competition

Topline: While the 2026 midterm elections are over a year away, attention in both parties has already shifted to Republicans’ efforts to retain their slim majorities in both Congressional houses. AEI’s Chris Stirewalt analyzes the differences that may appear in next year’s midterm elections between the two houses, and how the House of Representatives candidates and the Senate candidates may face very distinct races.

The House to Fall in Line: In the House of Representatives, the presidential approval rating remains the best indicator of the GOP’s midterm performance. If President Trump maintains his current approval rating, or if it lowers further in the next 15 months, it is likely that the Democratic Party will make substantial gains. However, if his approval ratings increase and get close to even with voters, Republicans have a chance to hold onto their slim majority.

Political Independence: In the Senate, candidate quality matters much more in each race. Less than 4 percent of House members represent a district won by the opposing party’s presidential candidate, whereas in the Senate, this is true for 11 out of the body’s 100 members. The 2024 election saw a lot of ticket splitting among Senate races, and midterm elections provide even greater chances for states to demonstrate political independence.

A Congressional Battleground: In 2026, there are nine Senate races likely to be competitive in the most liberal readings. If the Democratic Party flips four of the five Republican seats and holds all three of their current seats, they will take control of Congress’s upper chamber. Senator Susan Collins of Maine, Senator Joni Ernst of Iowa, and the special election to fill the seat for the remainder of Vice President JD Vance’s Senate term in Ohio are all vulnerable Republican seats in the Senate.

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