Trump’s Midterm Election Risk: Inflation Hurts Voters
- The outlook event for 2026 held by asset manager Fidelity in Madrid had a clear protagonist: Donald Trump.
- These consequences are a threat to Trump himself, according to Principe, who emphasizes the possibility that the midterm elections, scheduled for next November 2026, could give a turn...
- Principe acknowledges that citizens' interest in the impact of Trump's tariffs has decreased significantly since the summer, but insists on the importance of the Republican president's trade policy...
The outlook event for 2026 held by asset manager Fidelity in Madrid had a clear protagonist: Donald Trump. Donatella Principe, Head of Continental European Market Strategy for the firm, one of the world’s largest investors, focused her macroeconomic analysis for next year on understanding the impact of Trump’s policies, and reached a clear conclusion: the US president’s narrative does not match economic reality, as his flagship measure for 2025, the imposition of tariffs, is having negative consequences for his voter base, exactly the opposite of what the president seemed to expect: a decline in the dollar,and inflation spikes that weigh, above all, on the country’s importing industry and the lower classes.
These consequences are a threat to Trump himself, according to Principe, who emphasizes the possibility that the midterm elections, scheduled for next November 2026, could give a turn to US policy that is influencing the market so much if Trump loses one of the two chambers.
Principe acknowledges that citizens’ interest in the impact of Trump’s tariffs has decreased significantly since the summer, but insists on the importance of the Republican president’s trade policy for the US economy and the global economy, and also for the prospects of Trump being able to retain power as his term progresses, as inflation and employment are the two major focuses of voters. “The trade war matters. Trump
negativo para sus expectativas políticas a futuro, teniendo en cuenta la importancia que le da el ciudadano medio del país a la pérdida de poder adquisitivo, y al mercado laboral. “Los aranceles están generando inflación en EEUU, pagan los importadores incluso más que los consumidores, y ahora está subiendo la inflación de bienes y cayendo la de servicios, lo contrario a la narrativa de Trump”, explica Principe.
Los datos que recoge Fidelity en su informe de perspectivas lo demuestran: desde el mes de julio la inflación de bienes, que en aquel momento se mantenía en terreno negativo, ha empezado a repuntar con fuerza, al contrario de la de servicios, que acumula una caída casi constante desde enero de 2023.
Y el problema para el presidente, es que los ciudadanos no perdonan la inflación. Principe explica cómo “las elecciones se han perdido a lo largo de todo el mundo por la pérdida de poder adquisitivo”, y en Estados Unidos la preocupación de los votantes no es diferente: según los datos que recoge la gestora, los estadounidenses admiten como su principal preocupación “la economía y el empleo”, con un 27% apuntando en este sentido, y en segundo lugar “la inflación”, con un 21% de la población destacándolo así.
Además,el último dato que recoge Fidelity demuestra que el presidente no escapa a las críticas por su gestión en este sentido: un 75% de los ciudadanos ahora considera ”insuficientes” las medidas de Trump para bajar los precios en el país,mientras el 5% las considera “excesivas”,y el 20% “adecuadas”. “en Estados Unidos la población no percibe la inflación como lo hace el sector financiero. La gente se preocupa por el mercado laboral y la inflación”, y no tanto por la política exterior, señala Principe, quien ahora advierte de que Trump está siendo capaz de hacer todo lo que no pudo hacer en su primer mandato por
Fidelity Investments believes that donald Trump could loose all his power in the midterm elections, as the inflation generated by his policies is harming his voters. According to a report by the investment firm, the former president’s supporters, who are largely working-class and reside in rural areas, are being disproportionately affected by rising prices. “Trump’s base is hurting the most from inflation,” Fidelity analysts wrote in a note to clients.”They are the ones who are most likely to feel the pain at the gas pump and the grocery store.” The report notes that Trump’s policies, such as the tax cuts and deregulation, have contributed to the current inflationary environment. These policies have boosted corporate profits, but they have also led to increased demand and higher prices. Fidelity believes that voters are beginning to realize that Trump’s policies are not working for them. As a result, the firm expects that Trump will lose support in the midterm elections. “We believe that Trump is losing his grip on his base,” the report states. ”Voters are starting to question weather he is really looking out for their best interests.” The midterm elections are scheduled to take place in November 2022. Control of Congress is at stake, and the outcome of the elections could have a critically important impact on the direction of the country. If Fidelity’s analysis is correct, Trump could face a major setback in the midterm elections. This could weaken his position within the Republican Party and potentially derail his plans to run for president again in 2024.
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The Inflation Reduction Act (IRA), signed into law on August 16, 2022, contains significant provisions aimed at lowering healthcare costs for Americans, particularly prescription drug prices. These changes are being implemented throughout 2023, 2024, 2025, and 2026, with ongoing effects expected beyond.
The Inflation Reduction Act (IRA) and Medicare Drug Price negotiation
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The Inflation Reduction act empowers the Centers for Medicare & Medicaid Services (CMS) to negotiate prices for certain high-expenditure prescription drugs covered under Medicare Part B and Part D. This is a direct response to longstanding concerns about the high cost of pharmaceuticals in the United States.
Prior to the IRA, Medicare was largely prohibited from directly negotiating drug prices with manufacturers. The new law allows for negotiation of up to 60 drugs between 2026 and 2029, with the number increasing over time. Drugs eligible for negotiation are those lacking generic or biosimilar competition and are among the most costly for Medicare. The first 10 drugs selected for negotiation were announced February 28, 2024. CMS press Release
Example: On February 28, 2024, CMS announced the first 10 drugs selected for price negotiation, including Eliquis (apixaban), Jardiance (empagliflozin), and Xarelto (rivaroxaban). negotiated prices for these drugs will take effect in 2026. CMS Fact Sheet
Legislative Background of the Drug Price Negotiation Provisions
The drug price negotiation provisions are outlined in Section 8423 of the Inflation Reduction Act, formally known as H.R. 5376.Full Text of H.R. 5376. This section details the process,criteria for drug selection,and penalties for manufacturers who refuse to participate in negotiations.
The Congressional Budget Office (CBO) estimated that the drug price negotiation provisions would save the federal government approximately $101.4 billion over ten years (2022-2031). CBO report on the inflation Reduction Act
The IRA extends enhanced premium tax credits established under the American Rescue Plan Act of 2021, making health insurance more affordable for individuals and families purchasing coverage through the Health Insurance Marketplace. These credits help lower monthly premiums based on income.
Prior to the IRA, these enhanced credits were set to expire at the end of 2022. The IRA’s extension ensures that millions of americans continue to receive financial assistance, preventing significant premium increases. The extension is in effect through December 31, 2025.
Example: A family of four with an income of $75,000 per year could receive an average premium tax credit of $6,600 annually, reducing their monthly health insurance premiums significantly. KFF Interactive on IRA Subsidies
Impact on Individuals with Low and Moderate Incomes
The extended ACA premium tax credits disproportionately benefit individuals and families with low and moderate incomes. Approximately 80% of those enrolled in Marketplace plans receive premium tax credits. CMS Marketplace Open Enrollment Report
The White House estimates that 13 million Americans are insured due to the enhanced premium tax credits. White House Fact Sheet