Tariff Backlash Could Cost Republicans The Senate

Authored by Mike Shedlock via MishTalk,

The math for Democrats to win the Senate looks extremely daunting. However, I see more than a reasonable shot for them.

Heading into the mid-term elections the Real Clear Politics Battle for the Senate map suggests it it is extremely unlikely for Democrats to take control of the Senate.

The Republicans have 46 safe or not up seats, and two more likely. To take control of the Senate, Democrats would have to win all nine likely or leans, plus six of seven tossups.

The math is not as daunting as it looks. Democrats are leading in Florida, Tennessee, and Nevada. I expect those leads to hold. That Republicans were only up by 1 percentage point in Indiana looks problematic for Republicans to say the least. For the sake of argument, put that in the Democrat column.

That just gets things to 49 where things stand right now.

Base Projection

My base projection for the Democrats right now is 49-50.

Every time I make a projection like this I get accused of being a Democrat lover or worse. Here’s the deal: I voted for Trump and would do so again vs Hillary.

I make my projection on the reality that Trump’s trade policy totally sucks. I expect his policy will backfire sooner rather than later.

My complete rationale follows.

Trump Threatens to Place Tariffs on All $500B China Imports, Blasts Fed Again

On Friday, I reported Trump Threatens to Place Tariffs on All $500B China Imports, Blasts Fed Again.

Independents are likely sick of Trump already and Trump attacking the Fed will make a lot of people nervous. The man does not know how to shut up.

Housing Weakening

Housing is already weakening due to rising interest rates coupled with affordability issues. On July 18, I commented Housing Starts Unexpectedly Plunge 12.3% in June, Permits Down 2.2%.

On July 23 I wrote Existing Home Sales Decline Third Month Despite Rising Inventory.

Trump’s tariffs on steel and lumber are not helping one bit.

Finally please note that Whirlpool, a Tariff Supporter, is Now a Tariff Victim.

Hardest Hit States

CNBC has a nice chart on States Hardest Hit In Widening Trade War.

States Exposed to Steel Tariffs

Inquiring minds may also wish to consider How Trump’s Steel and Aluminum Tariffs Could Affect State Economies

Tariffs Impact US Jobs

Even before the threat of an additional $500 billion in tariffs, Missouri, Indiana, North Dakota, and Tennessee are all in the trade limelight.

The Washington Post reports How Trump’s Tariffs on Mexico are Taking Jobs from U.S. Workers.

The article covers numerous states but let’s put a spotlight on Missouri and Mid Continent , the US’s largest nail manufacturer, about to go out of business due to Trump tariffs.

Sen. Claire McCaskill (D-Mo.), facing a tough reelection race in a state Trump won by 19 percentage points in 2016, seized on the company’s predicament, interrogating Commerce Secretary Wilbur Ross in a hearing on Capitol Hill last month. The next week, she was trailed by media outlets as she toured the company’s facilities despite blistering heat.

A spokeswoman for McCaskill’s GOP opponent, Josh Hawley, the state attorney general, said in a statement that Hawley “supports the president’s goal to get better trade deals and stop trade cheaters, like China,” but that Mid Continent “makes a good case for an exemption and we have spoken to the White House about it.”

“The result is the largest U.S. nail manufacturer with — before June 1, anyway — more than 500 employees, nearly double the workforce of five years ago. These workers are Americans. They have American families. If they lose their jobs, those jobs will be American jobs.”

Mid Continent is Mexican owned. But it is located in the US and employs 500 people here. Thanks to Trump Tariffs, it is about to go out of business.

The Republican and the Democrat candidate both complained to Trump. The Democrat, McCaskill, is making a huge campaign issue out of it.

The Republican, Hawley, leads by two percentage points. Will that last?

Prices

If Trump follows through with his threats on all Chinese products, $500 billion in total, those tariffs will temporarily hike prices in addition to doing further damage to US jobs.

I envision a headline like “Prices Rise on 10,000 Walmart Items Due to Trump Tariffs”.

This economy is far sicker than it looks. People are falling further and further behind on wages, and they tend to take it out on the party in power.

Polls

Curiously, support for Trump hit an all time high of 45%. The starts are misleading. First, 45% is not an inspiring number. Second, it reflects increasing support from the base.

Appealing to the base is an idiotic tactic actually. Where is the base going? It’s the moderates and independents that matter.

Conclusion

Trump is doing everything he can to negate the tax cuts and turn what could have been a Republican blowout into a genuine horse race.

It is far too early to predict a Democrat win. But things look far better for the Democrats than most believe.

As I have noted, this is not a desire. Rather, this is an estimation as to what is happening now.

Millennials sat out the the last presidential election. The independents and Libertarians, including me, voted for Trump.

If the economy weakens substantially or the stock market dives, both of which may happen given Trump’s tariff policy and Fed rate hikes, it is not inconceivable for Democrats to take the Senate.

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Author: Tyler Durden

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