The surge in oil prices is eroding the political dividends brought by Trump's tax cut bill, and Republicans are increasingly worried about the midterm elections.
According to Reuters, Trump will travel to Nevada and Arizona this week for a campaign-style tour aimed at boosting Republican morale and promoting his tax and immigration bills. However, conflicts in the Middle East have pushed up oil prices, compounded by rising living costs across food, housing, insurance, and other essentials, shaking the fundamentals of the U.S. economy and undermining Trump's ability to rally support for Republican candidates.
The report noted that five Republican strategists stated that the White House has lost control over the issue of living costs, with the political tailwinds from the tax cut bill and economic resilience being gradually offset. Trump’s approval rating fell to 36% in a Reuters/Ipsos poll conducted in late March, marking a new low in his second term.
Meanwhile, according to authoritative election forecasters at Cook Political Report, Democrats have become overwhelming favorites to reclaim a majority in the House of Representatives. Key Senate seats in North Carolina, Georgia, Ohio, and even Nebraska—a conservative stronghold—are also tilting toward the Democrats.
Tax cut dividends eroded by rising oil prices raise concerns among Republican strategists.
The centerpiece of Trump’s trip is hosting a roundtable meeting in Las Vegas focused on the “tax-free tips” policy, promoting the practical benefits of his 2025 tax law to workers in the restaurant, hospitality, and casino industries.
Under this bill, eligible workers can deduct up to $25,000 in tip income from federal taxes, although payroll taxes still apply, and benefits for higher-income earners will phase out. White House spokesperson Karoline Leavitt said on Wednesday that more than 53 million taxpayers have already benefited from at least one provision of Trump’s signature tax cuts during this tax season, with an average refund exceeding $3,400.
However, several Republican strategists remain pessimistic. David Damore, a political science professor at the University of Nevada, Las Vegas, stated, “The cost of living will overshadow everything—not as a pun—including any minor improvements in refunds.” A Republican strategist involved in congressional election consulting bluntly remarked that the political impact of the tax cut bill “has been neutralized.”
Middle East conflict drives up oil prices, leaving few policy tools available.
High oil prices represent a core political vulnerability for Republicans. Brent crude has now exceeded $96 per barrel, with tensions in the Strait of Hormuz persisting and global oil supplies disrupted. According to sources cited in the report, even if the conflict ends, global oil producers may need weeks to restore production capacity, meaning fuel price hikes will continue to ripple through various consumer goods and services, creating sticky inflationary pressures.
The White House has very limited policy space left to lower energy prices. According to individuals familiar with internal White House discussions, the authorities have already tapped strategic oil reserves, adjusted shipping regulations, and eased sanctions on Russian and Iranian oil, yet oil prices remain high. "The remaining options are all bad ones, and we have advised the White House against taking these measures," said a senior oil industry executive involved in the relevant discussions.
Trump’s statements on oil prices have been inconsistent, sometimes suggesting that Americans may need to endure higher prices for an extended period, while at other times claiming that prices will drop significantly after the war ends. White House spokesperson Kush Desai stated that Trump has consistently been candid about the short-term economic impacts of the war with Iran and emphasized that the administration remains fully focused on advancing its domestic cost-of-living agenda.
White House Intensifies Support for Midterm Elections as Trump Downplays Concerns Over Losses
In response to the increasingly challenging electoral landscape, the White House has begun ramping up its support for the midterm elections. Last week, Trump announced the deployment of senior advisor James Blair to assist various midterm campaign teams, a move widely seen as a signal of growing concern within the White House regarding the party’s prospects.
Competitive Senate and House races are underway in Nevada and Arizona. On Friday, Trump will also attend an event hosted by the conservative group Turning Point USA in Phoenix. Meanwhile, Trump’s recent public dispute with Pope Leo, along with criticism sparked by his social media posts featuring religious imagery likening himself to biblical figures, has somewhat diverted attention from his economic agenda.
Trump himself has sought to downplay concerns over potential midterm election losses. “Even if you have a great president, they often lose in the midterms,” he said during a Fox interview on Wednesday. “So we’re going to work hard to turn that around.”
Editor/Liam