OPINION:
President Trump’s second-term agenda is radically transforming America and its place in the world.
In the midterm elections, voters will render a judgment. Tariffs, deportations and the war with Iran are unpopular — all slow growth and stoke inflation.
Through the first Trump and Biden presidencies, the economy grew 2.5% annually. So far, Trump 2.0 has delivered about 2%. That’s a nonplus performance, especially with artificial intelligence boosting productivity growth and oil exports booming.
Beyond investments in AI and data centers, the oil patch and supporting activities, the economy is only doing a bit better than it is treading water.
Shifting tariffs and shortages of skilled workers, which additional immigrants could help fill, make planning investments difficult.
Tariffs and deportations haven’t produced the jobs dividend promised MAGA supporters.
Manufacturing employment is down. In the automobile industry, tariffs have done more harm than good. High duties on motor vehicles insulate the market — which should benefit domestic production and employment — but tariffs on components, steel and aluminum are up too.
In the decade before COVID-19, auto sales were about 17 million a year. But with the average cost of a new vehicle now above $50,000 and the major U.S. manufacturers offering fewer smaller, more affordable cars, auto sales are running about 16 million a year.
That’s likely to continue for the foreseeable future.
Americans are keeping their vehicles longer, which is good news for the folks who fix old jalopies. But despite tariffs, GM is doubling down on its investments in Korean auto production. That’s where the giant automaker produces its smaller SUVs for the U.S. market, and it’s expanding there.
Despite some foreign automakers pledging to move more production to the United States, overall, these trends are likely costing Americans at least 50,000 jobs.
In the home appliance industry, Whirlpool tells a similarly sad story.
In cities where Immigration and Customs Enforcement (ICE) enforcement has been most robust, employment among men without a college education has declined, and wages haven’t improved. This is especially true in immigrant-heavy activities such as agriculture, construction, manufacturing and wholesale trade.
On the other end of the employment ladder, Mr. Trump’s tougher immigration policies are thinning the numbers of foreign students in STEM disciplines at American universities and talented young people planning careers in the United States.
In an economy where immigrants fill about one-fifth of STEM positions and over two-fifths of doctoral-level science and engineering roles, this hurts innovation, growth and employment — for native-born workers too.
Despite slower growth, American companies are becoming a lot more profitable, but American workers aren’t doing better. Real incomes for most are not rising much, and a growing share of the economic pie goes to profits rather than wages and salaries.
The stock market is booming, but housing remains unaffordable for many.
It’s a second Gilded Age.
Those with significant positions in equities and homes and who land one of those high-paying jobs in technology, finance or the professions are doing quite well, but many folks feel disappointed and even betrayed by the system.
No surprise, voters are unhappy. Polls tracked by Real Clear Polling show that 25% more voters disapprove than approve of Mr. Trump’s handling of the economy. On inflation, the gap is 37%, but on immigration, it is only 10%.
The electoral scoreboard, depending on where you look, is more than worrisome for Republicans. And it should frighten Americans with a faith in free markets and capitalism. Kalshi and Polymarkets put the odds of the Democrats picking up enough seats to control the House next year at about 85%.
Rising grocery prices and an unpopular war with Iran are putting the Senate in play, too. To win in the upper house, Democrats must flip four of six Republican seats that are not considered reasonably safe.
Examining polls tracked by Real Clear Politics and betting odds on Kalshi and Polymarket, it appears that Democrats have a good shot at taking North Carolina, Maine and Alaska.
The Republicans are in better shape in Iowa. Texas and Ohio are tossups.
Apparently, swing voters are assigning their negative views of Mr. Trump’s performance onto Republican candidates and believe Democrats could better manage the economy.
Those outcomes wouldn’t be terribly unusual for an unpopular, second-term incumbent president.
But more ominous forces are emerging. The success of democratic socialists in primary elections, the groundswell to tax and limit AI and ban new data centers, and growing interest in wealth taxes in fiscally troubled states like New York and California are menacing to our free- market system.
America is at a crossroads.
Our economy has flourished by welcoming foreign talent, leading in new technologies and rewarding entrepreneurs for fashioning their innovation into wealth for themselves and opportunities for the rest of us.
In 2028, the nation could be one election away from abandoning its core beliefs and precious heritage.
• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
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