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March 28, 2025
The November electoral victory that Republicans secured winning control of the Executive Branch, along with both Houses of Congress, gave them a powerful opportunity to reshape government and deliver on their promises to voters. Only months into the next Trump administration, it appears promises of economic prosperity might have been a pipe dream. Friday, the major indices got hammered, with the Nasdaq closing down by over 13% from its recent high. The tariff situation is spiraling into a much more significant actor on the economy than many voters previously imagined. It looks as though the Republicans may blow their opportunity, paving the way for a more cohesive Democratic party to regain the reins in the next election.
Now, without a doubt, the Democratic party is not at its finest hour. After losing moderates like Kyrsten Sinema and Joe Manchin and tiring Americans with progressive rhetoric too far from where middle America stands, they received a rude wake-up call. For the sake of the Democratic Party’s future, hopefully, they will take heed of the lesson. If they choose to, an economy and federal government thrust into disarray by rapid barrages of extreme measures provides the perfect opening for Democrats to make a revised plea to Americans.
The Democratic party, should they advertise their platform as the party of free trade—and thus economic liberalism—could capitalize on the Republicans’ recent shift away from economic freedom under the second Trump administration. While Trump and other leading Republicans have promised short term pain as transitory in pursuit of longer term economic prosperity, market reactions indicate that investors may not be buying into that argument.
Sure, it is possible that Trump’s economic policy could end up playing out more favorably than experts expect, however market reactions certainly seem to lean on the belief that the policies are detrimental. In large numbers, American voters cast ballots for economic prosperity in November, but President Trump’s decisions could tarnish the Republicans’ reputation for being the party of economic prosperity. With the midterms coming up in 2026, if Trump seeks to maintain his control over the government, he will likely need more enthusiasm from markets.
Whether Trump decides to stay the course with tariffs or adopt a more conventional economic policy is unclear, especially with the current fast pace of change in Washington. Should Trump’s economy falter, Democrats, intent on regaining power after a poor showing in November, will likely be ready to take advantage of the moment to make a new case to American voters.
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