Trump’s Economic Promises Confront Political Reality as Tariffs Drive Up Costs

One year into his second term, President Donald Trump faces a paradox that threatens to upend Republican midterm prospects: his signature economic policy has become his most significant political liability.

Despite an unemployment rate hovering near historic lows, Trump’s overall approval rating has plummeted to 39% according to recent polling, with 69% of Americans reporting that his tariffs have increased prices they pay—a figure encompassing majorities across party lines. The disconnect between traditional economic indicators and public sentiment reveals how thoroughly tariff-driven inflation has poisoned what Republicans once considered their most formidable electoral asset.

The crisis crystallizes in stark numbers. The Tax Foundation estimates Trump’s tariffs amount to an average tax increase of $1,300 per U.S. household in 2026, representing the largest tax hike as a percentage of GDP since 1993. These aren’t abstract economic projections—they’re showing up in grocery bills, furniture prices, and construction costs that American families confront daily.

From Economic Strength to Political Vulnerability

The erosion of Trump’s standing on what was once his strongest issue represents a dramatic reversal. His net approval on the economy now stands at -16.5, a metric that would have seemed unthinkable during his first term when economic approval consistently exceeded overall job performance ratings. Only 39% of Americans approve of his presidency overall, with approval among independents at just 29%—numbers that send tremors through Republican strategists eyeing November’s midterm elections.

The polling tells a story of broad-based disillusionment. A Fox News survey found 54% of voters believe America is worse off than a year ago, with most attributing the decline to economic policies. More troubling for the White House, 75% of Americans, including 56% of Republicans, believe tariffs are raising prices. When a president’s signature policy loses majority support within his own party, the political ground has fundamentally shifted.

Manufacturing employment—the sector Trump specifically promised would come “roaring back” due to tariffs—has declined every month since April 2025, according to recent Labor Department data. The disconnect between promise and performance has given Democrats an opening on an issue where Republicans held commanding advantages for years.

The Mechanics of Middle-Class Pain

Understanding why tariffs have proven so politically toxic requires examining their concrete impact on household finances. The Tax Foundation’s comprehensive analysis reveals that Trump’s trade policies have pushed the average effective tariff rate to 10.1%—the highest since 1946. Combined Section 232 and International Emergency Economic Powers Act (IEEPA) tariffs now apply across categories Americans cannot avoid: building materials, consumer electronics, clothing, and food.

The retail reality confirms the macroeconomic projections. Recent research from Harvard economists cited by the Tax Foundation shows retail prices have risen 4.9 percentage points relative to pre-tariff trends, with imported goods up 6% and domestic goods—benefiting from reduced foreign competition—up 4.3%. Categories like apparel, coffee, household textiles, and furniture have experienced even sharper increases.

For the housing market, already strained by supply shortages, tariffs on lumber, steel, aluminum, copper, and cabinet materials add an estimated $17,500 to new home construction costs. The Center for American Progress projects these increased costs will prevent construction of 450,000 homes over the next five years—exacerbating affordability challenges in a sector where voters’ economic anxieties are most acute.

The Tax Policy Center estimates an average burden of approximately $2,100 per household in 2026, with the federal tax rate rising 1.9 percentage points for bottom-quintile households compared to 1.4 points for the top quintile. Tariffs function as regressive taxation, hitting those least able to absorb increased costs.

A Progressive Pivot from a Populist President

Facing eroding support, Trump has reached for an unexpected policy lever: a temporary 10% cap on credit card interest rates. The proposal, announced in early January with implementation targeted for the anniversary of his second inauguration, represents a striking ideological departure.

Credit card rates currently average over 20%, according to Federal Reserve statistics. Americans owe $1.23 trillion in credit card balances—the highest on record—making the burden politically salient. Trump’s proposal echoes legislation previously introduced by Senators Bernie Sanders and Josh Hawley, an unusual bipartisan pairing that underscores the issue’s populist appeal.

The banking industry’s response was immediate and hostile. Trade groups representing major card issuers argued a 10% cap “would reduce credit availability and be devastating for millions of American families and small business owners,” warning of restricted access particularly for higher-risk borrowers. Credit card stocks tumbled on the announcement, with analysts at Goldman Sachs noting the lack of clear enforcement mechanisms absent congressional action.

Trump’s lack of implementation specifics—no executive order has materialized, no legislation endorsed—suggests the proposal functions more as political theater than serious policy. Senator Elizabeth Warren dismissed it as “begging credit card companies to play nice,” while even some Republican allies expressed skepticism about the feasibility.

Yet the very fact that Trump felt compelled to float such a traditionally progressive policy instrument—one that directly interferes with private sector pricing—reveals the administration’s political desperation. When a president whose brand was built on deregulation and business-friendly policies starts proposing price controls, the electoral pressure is severe.

The Midterm Mathematics

Republican strategists confront uncomfortable arithmetic heading into the 2026 midterms. Historically, the president’s party loses an average of 28 House seats in midterm elections. With Republicans holding only narrow majorities in both chambers, even modest losses could flip control.

Polling shows only 30% of Latinos and adults under 35 now approve of Trump’s performance, down from 41% near the start of his term. These demographic groups represent growth constituencies that Republicans cannot afford to hemorrhage if they hope to maintain long-term competitiveness.

The economy’s role as the decisive issue for swing voters amplifies the danger. More voters think the economy will get worse this year rather than better by a 13-point margin (45% worse vs. 32% better), a dramatic shift from a year ago when optimism prevailed. Republican pollster Daron Shaw, who helps conduct Fox News surveys, acknowledged the challenge: “The president faces two difficult obstacles—the virtually unanimous and intractable opposition of Democrats and the stubbornness of high prices.”

Shaw and other GOP operatives are banking on the economic benefits of the recently passed “One Big Beautiful Bill Act”—which made most Tax Cuts and Jobs Act provisions permanent—materializing before November. Yet tax policy changes typically require months to flow through to household finances, while tariff-driven price increases arrive immediately at checkout counters.

Democrats, meanwhile, have found their footing on economic messaging after years of defensive positioning. Recent NBC polling shows the smallest Republican advantage on handling the economy since 2017, while a narrow majority of adults trust Democrats over Republicans on addressing rising prices. This represents a stunning reversal from traditional partisan alignments on economic issues.

The Supreme Court Wild Card

Adding uncertainty to an already volatile political landscape, the Supreme Court is expected to rule soon on challenges to Trump’s legal authority to impose most of his tariffs under the International Emergency Economic Powers Act. Half of Americans expect the Court to uphold Trump’s tariffs, though far fewer want it to.

A ruling striking down IEEPA-based tariffs would eliminate the bulk of Trump’s trade taxes, potentially providing economic relief but forcing a humiliating policy retreat. Conversely, upholding presidential authority might embolden further tariff escalation, risking additional price pressures. Either outcome carries significant political ramifications as campaigns intensify.

Conclusion: Promises vs. Performance

Trump’s predicament illustrates a fundamental challenge of populist economic nationalism: tariffs that sound appealing in theory—protecting American jobs, punishing foreign competitors, generating revenue for domestic priorities—become politically toxic when voters experience their actual effects. The gap between campaign rhetoric about “bringing factories roaring back” and the reality of declining manufacturing employment and elevated consumer prices has created precisely the kind of credibility deficit that transforms midterm elections into referendums on governing competence.

The credit card interest cap proposal, regardless of its substantive merits or implementation prospects, functions as tacit acknowledgment that the administration’s core economic strategy has not delivered for middle-class Americans. When a president must reach for emergency policy interventions a year into his term, the original plan has failed.

As November approaches, Republicans face a choice between defending tariff policies that remain unpopular even within their base, or pivoting away from what Trump has positioned as a signature achievement. Neither option offers easy politics. For Democrats, the opening is clear: run on affordability, emphasize the household cost of Trump’s trade war, and position themselves as the party that will provide relief rather than rhetoric.

The ultimate irony: Trump’s economic promises confronting political reality may determine whether Republicans maintain the congressional majorities needed to implement any economic agenda at all.