Trump's voters stand to lose the most from his kamikaze trade policies
The economic reality is that Trump isn't winning anything. He is simply reshaping US trade policy to create a lot of losers: the American people chief among them.
According to modelling by the Yale University-based Budget Lab, American consumers face paying for an average tariff rate of 18.2 per cent, the highest since 1934. They project that this will raise prices by 1.8 per cent in the short term, which translates to an average loss of $2,400 per household in 2025.
Accounting for expected changes in consumer behaviour in response to the tariffs (by which time consumers have already lost out by paying for goods they otherwise would not have purchased), the effective tariff rate comes to 17.3 per cent; that is still the highest since 1935.
More concerning for Trump and his party, however, is the regressive distributional effects of the tariffs. The proportional impact on disposable incomes for the lowest earning American households is set to be three times as bad as it is for the top decile.
Trump's electoral success has been built on voters who feel that the economy has left them behind. His message has single-handedly reshaped the American electoral map and made his party significantly more dependent on poor, working-class, and non-university educated voters than it once was. Unlike 2020, Trump won a majority of voters earning less than $50,000 per year in 2024: this was an unthinkable outcome for a Republican presidential candidate as recently as a decade ago.
While his 2016 election victory was powered by poorer white voters, he has since attracted significantly more poor and working-class Hispanic votes and even moved the needle on overwhelmingly Democratic African-Americans. Make no mistake, it is these American voters who will be the major losers from these tariffs, not Europeans, Canadians, or Mexicans.
It would also be wrong to expect Trump's base to enjoy the benefits of the President's protectionism. Yes, American manufacturing output is projected to expand by 2 per cent because of the tariffs, but that is because raw manufacturing output would rise by substituting high value, specialised production with lower value production. This makes the sector less efficient and productive.
Some small groups of people may get jobs that otherwise wouldn't have existed, but that will be at the direct expense of far more people who will suffer from subsequent lower productivity. In any case, the positive impact of increased manufacturing production on overall economic output would be more than cancelled out by expected productivity losses in key sectors like construction, mining, and agriculture. These industries have been a fruitful source of Republican fundraising and employ plenty of Trump's core voters.
But could it be that this doesn't matter? Trump is giving Americans less globalisation at the expense of their incomes: isn't that what people voted for? Perhaps, but the voters who swing US elections do so with their wallets – the opinions they state to pollsters matter much less. The reason Trump lost in 2020 and the reason why he reclaimed office in 2024 is the same: it's the economy, stupid. Trump may not have to face voters again, but his party and the long line of would-be successors should be worried.
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