Economic Populism Lost, Again

Turn any article into a podcast. Upgrade now to start listening. Members can share articles with friends & family to bypass the paywall. You’re reading Dispatch Markets, a weekly dive into the forces driving economic growth—and those holding it back—featuring Scott Lincicome, Kyla Scanlon, Karl Smith, Marian Tupy, and Adam Ozimek. In the weeks between Donald Trump’s 2024 election victory and his 2025 inauguration, several journalists asked me to predict U.S. trade policy during Trump 2.0. The first thing I’d always say was some variation of what I told Dispatch readers around the same time: Yes, we should expect more tariffs (and more chaos), but it wouldn’t make political or economic sense for an administration propelled into power by inflation-weary voters to immediately start taxing coffee, bananas, energy, and other not-made-here necessities. A macroeconomically costly global tariff regime, therefore, was probably off the table. I admit: I was wrong. Last week’s election earthquake set off an inevitable scramble on the right to identify the cause. Most notable was Vice President J.D. Vance, who took to Twitter to declare that “the real reason we lost” was the Iran war, conveniently omitting any possible blame for the populist economic policies (tariffs, especially) that he champions. Others on the right did the exact opposite, blaming everything on tariffs while ignoring a war that many of them supported (at least initially). Both sides are wrong. Exit polling data confirm that both tariffs and Iran—along with several other issues—drove last week’s election results. Determining each factor’s precise weight is a fool’s errand, especially at this early stage. Yet one thing is already clear: American voters again rejected the economic populism that’s been championed, in different flavors, by both the right and the left over the last decade. A “populist” economic agenda, it turns out, isn’t very popular at all—at least once voters get a real-world taste of it. Swept Away Illustration by Noah Hickey/The Dispatch (Photos via Getty Images). What the numbers say. Several concerns drove voters to reject Trump’s GOP in historic fashion: the economy (centered on prices and affordability), Iran, corruption, aggressive deportations, and Trump himself. We know this because voters told us—before and after the election. The main exit poll this year, the Voter Poll that SSRS conducted for the Associated Press and other big media outlets, surveyed roughly 100,000 voters before and on Election Day. As shown in the charts below, these issues dominated voters’ priorities: As readers know, I’ve been skeptical of the Iran war, in both design and execution, since the beginning. As National Review’s Jim Geraghty notes, the exit polls show it did indeed hurt Republicans: 74 percent of voters called the war a “crucial” or “major” factor in their vote, and 63 percent said attacking Iran was the wrong decision. Even more important, the war’s effect on fuel, fertilizer, and other prices was a major economic irritant, as was the general Trumpian chaos surrounding it. But the data also show that the war was an accelerant, not what got voters’ economic fire roaring in the first place. As Phil Magness already detailed for The Dispatch, the administration’s weakness on the economy started with Trump’s tariffs, with voter disapproval evident in both last week’s exit polls and numerous surveys dating back to last spring: The tariff issue has steadily eroded Trump’s economic performance rating since he launched a trade war against the rest of the globe on “Liberation Day” in April 2025. The Economist/YouGov tracker tells the story. In Trump’s first term from 2017 to 2021, his economic ratings remained generally high. In the second, his economic approval began at the same level as his first term, then plummeted as the tariffs rolled out—and it never recovered. It sank to a net minus-36 by October 2026. The unpopular war in Iran and its accompanying strains on gasoline prices accelerated the decline, certainly, but the data show it was already well underway because of the tariffs. National Review’s Dan McLaughlin, as well as pollster Mark Penn and former NYC council president Andrew Stein find similar things, with Trump losing voters’ trust on the economy and affordability long before the Iran war began. My Cato Institute colleague Alfredo Carrillo Obregon went even deeper right before the election, documenting dozens of polls since early 2025 showing broad and rising opposition to tariffs, even among blue-collar workers, mainly for cost-of-living reasons. Even American farmers—typically loyal to Trump—eventually soured on the import taxes and their ostensible goals: Per Purdue’s latest Ag Economy Barometer, only 35 percent of farmers surveyed in mid-October thought tariffs would strengthen the U.S. agricultural economy (down from 70 percent in spring 2025), while 51 percent said tariffs would weaken it. And, as I wrote in the Washington Post in September, a surprising 75 percent of registered voters said tariffs would be important to their midterm vote, including 64 percent of independents. They told us they’d vote on tariffs. Then they did. As Magness notes, the exit polls make all this abundantly clear: “66 percent of voters said Trump’s tariff policies hurt the national economy, and 64 percent said they hurt the economy in their own area. Just 21 percent said tariffs helped.” State-level exit polling on tariffs was similarly brutal—including in key Senate battleground states like Texas, Michigan, Ohio, and North Carolina: Tariffs were, in Magness’ words, a “millstone” around Republicans’ necks—largely because they so aggravated voters’ top economic concern: the cost of living. They are intended to raise prices—that’s how they protect domestic manufacturers, duh—and that’s precisely what they did: Several studies have found that Americans bore most of the tariffs’ economic burden in 2025; other studies show they had a meaningful effect on the overall price level last year; and numerous media reports detailed how tariffs motivated large importers and retailers, small businesses, and domestic manufacturers (e.g., Whirlpool) to raise their prices. Tariffs also motivated the president and his team to spend much of the last year and a half insulting the very voters they needed. Trump first said that tariffs wouldn’t raise prices, then later defended those higher prices by telling Americans they didn’t need so many dolls and pencils. (He also called the word affordability “a con job by the Democrats” and “a hoax” last December.) Earlier in the year, Treasury Secretary Scott Bessent assured us that “cheap goods” weren’t important. Voters noticed who was sneering at their desire to pay less for stuff—it was the guys imposing historic tariffs—and they reacted accordingly. In a Politico poll conducted just before the election, 47 percent named the cost of living as a top personal issue, but only 13 percent said that the issue mattered most to the Republican Party. (Tariffs got 19 percent.) Even among Trump’s own 2024 voters, 45 percent called cost of living a personal priority, but only 22 percent thought it was a GOP priority. Back in the exit poll, roughly two-thirds of respondents said Trump’s policies had made the economy worse, and 62 percent blamed higher prices more on his policies than on factors outside his control. The conclusion here is clear: Voters cared about prices and thought Republicans didn’t—thanks in no small part to Trump’s tariff binge. The tariffs also, however, fed into two other voter concerns. As we’ve discussed, tariffs have a long history of fomenting cronyism, as companies jockey for exemptions and protections, and they did it again over the last two years: trade and tariff lobbying hit record levels, and numerous CEOs—American and foreign—traveled to Washington to win special treatment (often on live TV). Tariffs are also uniquely tied to “Tariff Man” Trump himself, who implemented them in his typically chaotic style and—as Dispatch readers know better than anyone—just likes tariffs and always has. Back in the real world, both Democrats and Republicans saw the anti-tariff wave coming. As I’ve written here, the White House spent the past year quietly retreating: dropping tariffs on coffee, meat, and produce last November; nixing fertilizer tariffs this summer to help disgruntled farmers; and then modifying its Canada tariffs two weeks before Election Day to help Sen. Susan Collins in Maine. Democrats in the House and the Senate introduced messaging legislation to repeal existing tariffs and to reform the laws authorizing the levies. Then there’s campaign spending. As Carrillo Obregon noted (and as I showed in my last edition’s Chart of the Week), House Democratic campaigns spent more than $58 million on ads attacking tariffs, up from basically nothing (pro or con) in 2022 and 2024, while Republicans spent zero dollars—zero—defending them. Ads in battleground states were similarly lopsided: Put it all together, and it’s clear that these “populist” tariffs cost Republicans a lot of votes last week. As GOP strategist Kevin Madden put it, “When voters’ top concerns are inflation and affordability, and you answer those concerns with tariffs, a trade war, and a war with Iran that exacerbates those worries, you lose elections.” Now those same voters want the Democrat-controlled Congress to do something about it: Huzzah. It’s not just tariffs. The midterm’s economic rebuke was not, however, just about Iran and tariffs (though they were certainly the most visible parts). It was a broader rejection of some of the most “populist” aspects of the president’s second-term economic agenda: Trump’s deportations were based in no small part on the administration’s (dubious) economic claims that immigrants drain government resources, steal jobs, and depress wages. Yet 57 percent of midterm voters said immigration enforcement had gone too far; farmers and meatpackers were particularly hurt by the initiatives; and Latino voters swung 21 points toward Democrats. Large portions of the country clearly soured on the broad and draconian acts that inevitably accompany a mass deportation effort. This includes the highly visible workplace raids that—by removing nonviolent illegal immigrants and discouraging legal ones from showing up—severely strained agricultural, construction, and other immigrant-dependent workforces, adding to economic and price pressures in those U.S. industries. Voter disapproval among Latinos, who had also rejected Republicans over tariffs and cost-of-living issues, was particularly important in border regions: The administration’s fiscal populism probably hurt too. As Cato’s Adam Michel notes, Trump’s oft-touted tax carveouts for state and local taxes (SALT), tips, overtime, car loans, and seniors fell flat among the very constituencies they targeted, and everyone mocked his desperate, inflationary promise to send voters $5,000 checks for electing Republicans. Trump’s efforts to buy off American farmers with billions in “election candy,” which I documented last month, didn’t salvage Kansas or Iowa (the latter of which also didn’t fall for his populist promise of a big, subsidized/protected steel factory). His total disregard for the federal deficit, which hit $2 trillion in 2026, likely added to upward pressure on the 10-year Treasury yield and thus 30-year mortgage rates, which averaged 7.2 percent the week of the election. And his efforts to jawbone the Federal Reserve into keeping interest rates lower, to the extent they were successful, also contributed to inflation, which was too hot before Iran and just came in even hotter for October. (Timely new paper here.) Exit polling didn’t ask about Trump’s unprecedented equity stakes in private U.S. companies—now at 41 and counting—but such transactions invite exactly the cronyism and corruption voters disliked and heighten public perception of insider dealing. As Cato’s Tad DeHaven has meticulously detailed, in fact, several of these transactions have more than a whiff of actual corruption. Voters’ explicit or implicit rejection of these Trump economic priorities does not mean, however, that they’re embracing the populist left. As Reason’s Eric Boehm noted, for example, only 18 percent of the midterm electorate self-identified as democratic socialists, and candidates endorsed by populist Sen. Bernie Sanders generally underperformed their moderate Democratic counterparts. Boehm and the Tax Foundation’s Jared Walczak add that voters in several states—North Carolina (twice), California, Oklahoma, Wyoming, Iowa—shied away from populist tax policies, whether they were hikes (on income and wealth taxes) or cuts (on property taxes). Overall, the election was a repudiation of Trump and the populist “new right,” not an endorsement of their mirror image on the populist left. Why economic populism keeps failing at the ballot box. Indeed, last week’s rebuke was actually the third election in a row in which voters rejected a president’s populist economic agenda—recall they did it in 2022 and 2024, too. Biden’s flavor of economic populism differed from Trump’s, of course, but both shared several features: prioritizing producers and workers over consumers, using targeted interventions to reward “friends” and penalize “enemies,” and downplaying both fiscal restraint and inflation. These were evident in Trump’s tariffs, industrial subsidies, and government equity infusions, his immigration restrictions, and his fiscal profligacy. As I wrote earlier this year, moreover, many of Trump’s “affordability” initiatives—on antitrust, price controls, and mortgage interventions—came from populist Democrats. It’s frankly eerie how much Trump’s playbook over the past year mirrored Biden’s before it—in both form and electoral result. The Biden administration, you may recall, spent its early days “going big” with a convoluted, deficit-busting $1.9 trillion fiscal stimulus, while Trump “went big” with the convoluted, deficit-busting One Big Beautiful Bill Act. Both pushed industrial policies—subsidies, tariffs, “Buy American” rules, and more—that raised consumer prices, increased bureaucracy, and rewarded political allies. Team Biden also brushed off inflation as “transitory” and then pivoted to bragging about disinflation (inflation growing more slowly) and GDP growth. As noted above, Trump did much the same. And Biden campaigned in 2024 at various subsidized/protected factory sites, championing “Bidenomics” to inflation-weary voters who weren’t interested in what he and Kamala Harris were selling. In 2026, the same voters got the “Trumponomics” version, and they issued the same judgment. Voters’ dismissal of these populist initiatives is hardly surprising. Most people care about outcomes, not specific policies, and they want straightforward things: rising real wages, attainable necessities, mobility for themselves and their kids, and a relatively calm and predictable economy. Populist policies are ill-suited to deliver these things and—on things like tariffs, rent control, and deficit spending—often make them worse. So, while American voters might like how some of these policies sound, they keep rejecting the actual results. But even if these policies worked as advertised, they’re probably bad politics today. The benefits from things like tariffs and subsidies are slow to materialize and relatively narrow because most of us work in services. Manufacturing accounts for just 12.7 million of 159.3 million nonfarm jobs, or roughly 8 percent of the U.S. workforce. Factory investment announcements, meanwhile, are promises of future activity in places most of us don’t reside. And plenty can go wrong between a ribbon-cutting ceremony and the first paychecks. Populist policies’ costs, on the other hand, are immediate and universal. Higher prices quickly hit every American every time we shop. Uncertainty hits businesses large and small, broadly muting hiring and investment. Industrial policy and tariffs provide endless fodder for voters’ suspicions of cronyism and corruption—especially when presidents join hands with corporate executives at Oval Office ceremonies and factory ribbon-cuttings. Maybe expensive “jobs” programs made political sense in the mid-2010s, when the labor market was slack. Maybe sneering at “cheap stuff” and proudly abandoning the “consumer welfare standard” (as both left and right populists want to do) was acceptable when inflation was a non-issue. But after years of high prices and tight labor markets, American voters today prioritize the cost of living and punish anyone who shrugs it off. And after a decade of the Trump Show and its parade of sketchy deals, many are ready for boring old normalcy. This new reality argues for an economic agenda that, while the left and right will surely have different priorities, is for both centered on fiscal responsibility, policy neutrality, and market-based “affordability” fixes—the dreaded “neoliberalism” of past decades—not more spending, tariffs, bureaucracy, and handouts to favored groups. Few, if any, populists have updated their sales pitch. Maybe a fourth election rout will finally do the trick. Markets FTW Guys use pulley system to peddle steaks out NYC apartment window: “The friends skirted around potential city health-code violations by advertising as a business that sold $25 stickers that came with a free steak.” Chart(s) of the Week Worth Your Time Disclaimer: The opinions expressed above do not necessarily reflect those of the presenting sponsor. Want to see more of The Dispatch in Google search? Add Us as a Preferred Source Scott Lincicome is an author of the Dispatch Markets newsletter, vice president of general economics and trade at the Cato Institute, and a visiting lecturer at Duke University Law School. He wrote the Capitolism newsletter at The Dispatch from 2020 through 2026.