Iowa Senate Race in Focus as Trump Economy Struggles to Deliver
President Donald Trump's economic agenda is facing a critical test as voters prepare to render their judgment in the 2026 midterm elections. With polls showing growing dissatisfaction over tariffs, inflation, and immigration enforcement, Republicans are fighting to hold onto their Senate majority, and Iowa's Senate race has emerged as a key battleground.
Economist Peter Morici, a University of Maryland emeritus business professor, argues that the Trump economy is underperforming compared to previous administrations. During the combined Trump and Biden presidencies, the economy grew at an annual rate of 2.5%. Under Trump's second term, that growth has slowed to roughly 2%, despite significant investments in artificial intelligence and booming oil exports.
What is the state of the economy under Trump 2.0?
Morici points out that beyond investments in AI, data centers, and petroleum, the broader economy is barely treading water. Shifting tariffs and a shortage of skilled workers, which immigrants could help fill, are making it difficult for businesses to plan investments.
The promised jobs dividend for manufacturing has not materialized. Manufacturing employment is actually down, and the automobile industry has been hit particularly hard by tariffs on components, steel, and aluminum.
Before COVID, auto sales hovered around 17 million vehicles per year. Now, with the average cost of a new vehicle exceeding $50,000 and fewer affordable small cars available, sales have dropped to about 16 million annually. Americans are holding onto their vehicles longer, and GM is expanding production in Korea for smaller SUVs destined for the U.S. market.
Despite some foreign automakers' pledges to move production to the United States, these trends are likely costing Americans at least 50,000 jobs, Morici said.
How are tariffs and immigration policies affecting Iowa workers?
The impact is being felt across the heartland. In cities with aggressive ICE enforcement, employment among non-college educated men is down, and wages have stagnated. This is especially true in agriculture, construction, manufacturing, and wholesale trade, all sectors vital to Iowa's economy.
Whirlpool, a major appliance manufacturer, tells a similarly troubling story, Morici notes.
Trump's stricter immigration policies are also thinning the ranks of foreign students in STEM disciplines at American universities. With immigrants filling about one-fifth of STEM positions and over two-fifths of doctoral-level science and engineering roles, this trend handicaps innovation and employment growth for domestic workers.
Why are voters unhappy with the economy despite a booming stock market?
Despite slower growth, American companies are becoming more profitable, but workers aren't seeing the benefits. Real incomes for most Americans are barely rising, and a growing share of the economic pie is going to profits rather than wages.
The stock market is booming, yet housing remains unaffordable for many. Morici describes it as a second Gilded Age, where those with significant equity positions, home ownership, and high-paying jobs in tech or finance are thriving, while many others feel disappointed and even betrayed by the system.
Polls tracked by Real Clear Politics show a 25-point gap between disapproval and approval of Trump's handling of the economy. On inflation, that gap widens to 37 points, while on immigration it narrows to just 10 points.
What does this mean for the Iowa Senate race?
The trends are worrying for Republicans, but Morici says they should be downright frightening for Americans who believe in free markets and capitalism. Betting markets on Kalshi put the odds of Democrats taking control of the House at about 85%.
Rising grocery prices and an unpopular war with Iran are putting the Senate in play. To win the upper chamber, Democrats must flip four of six Republican-held seats considered vulnerable. Based on polling and betting odds, Democrats appear to have a good shot at North Carolina, Maine, and Alaska.
Republicans are in better shape in Iowa, while Texas and Ohio are tossups. Swing voters appear to be assigning their negative views of Trump's performance onto Republican candidates, believing Democrats could better manage the economy.
What are the long-term risks for the American economy?
Morici warns of ominous forces emerging: the success of Democratic Socialists in primary elections, a groundswell to tax AI and ban new data centers, and growing interest in wealth taxes in fiscally troubled states like New York and California.
America is at a crossroads, he argues. The nation's economy has flourished by welcoming foreign talent, leading in new technologies, and rewarding entrepreneurs. By 2028, the country could be one election away from abandoning that heritage.
For Iowa voters, the choice in November will be about more than just control of the Senate. It will be a referendum on the direction of the American economy and the values that have made it the envy of the world.
Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.