US Elections Newsletter
Elections update and snapshots of the implications of a potential second Trump presidency.
Key Insights
Donald Trump will likely be the Republican nominee, regardless of the plethora of court battles he faces. Nikki Haley’s effort is intended to legitimise her as a Republican second choice, in the event that health reasons or the judicial process prevent Trump from running.
The judiciary’s pursuit of Trump, like the January 6 protests, reflects the weakening of America’s ability to effect peaceful transitions of power. This suggests that whatever the outcome of the 2024 election is, it will be contested, with street protests being likely.
A Trump administration would not be able to overturn the Inflation Reduction Act, which heavily favours green energy, or the CHIPS Act, for example, without going through Congress. As such, the make up of Congress will be just as important as the presidency. So far, the Senate seems more likely to go Republican, with the House being uncertain.
Faced with a Trump presidency, commercial entities face myriad legal risks, including the cancellation of green energy subsidies (if Republicans take both houses of Congress), policy reversals on hydrocarbons and minerals extraction, and lawsuits over racial discrimination against various ethnic groups, including whites. Companies’ own DEI training materials would likely be used as evidence.
If Trump wins, one can expect severe protests by BLM and Antifa throughout progressive cities, targeting federal buildings and the police with arson attacks, as well as high end retail stores for looting.
Trump would likely accelerate the trade war with China, though he may also target allies with tariffs. China would likely retaliate with a range of measures, including retaliatory tariffs and potentially expropriations of some key Western firms, and closing down others.
Under Trump trade war would be more likely than overt US intervention in a potential conflict over Taiwan, as Trump would seek to push South Korea and Japan into the forefront.
Modad Geopolitics would be glad to conduct additional research on behalf of clients to elucidate the policy implications of a Trump or Biden presidency on their areas of interest.
Polling update
Presidential race
Most polls show Donald Trump winning the presidential race against Joe Biden by between 1 and 6 points, though at least two polls show Biden winning. These results should be taken with a grain of salt for at least two reasons. First, the margins of victory are often within the margin of error. Second, voting depends on mobilisation as much as it depends on opinions. That is, the team with the best electoral machine can often deliver more votes than their popularity predicts. With many states expanding access to mail-in ballots, the question of vote harvesting – that is, the collection of votes by election machines from citizens who often would not have voted otherwise – plays a disproportionate role. The Democrats are far better organised than the Republicans to deliver these types of votes, especially from urban areas with a high proportion of blacks and Hispanics.
Congressional race
Senate
There are 34 Senate seats up for election in 2024. Of those, pollsters expect 14 to be competitive and the rest to be safe. Of these 14, it appears that 9 are most competitive, and one is likely to flip from Democrat to Republican. The most likely outcome is for a very narrow Republican majority in the Senate, flipping it from the current very narrow Democratic majority (51 out of 100).
House
For House elections, there is much greater uncertainty as to the outcome. It is very unclear at this stage who will win the House, and whether Democrats can translate their organisational advantage in presidential elections into a victory in the House as well.
Why it matters:
The US system limits the president’s powers considerably, as all financing must garner Congressional approval. As such, the President cannot, for example, revoke financing that was already passed by Congress (for instance, for the CHIPS Act or the Inflation Reduction Act), unless a new Congress agrees with him. A congressional act cannot be revoked with a presidential decree. However, this does not mean that a president is powerless. He may choose to paralyse certain agencies, to impose additional conditions on their operation, and to kneecap agencies responsible for enforcing the law in myriad ways.
Policy announcements
Trump says he will not be a dictator – except on day 1
This is Trump’s way of signalling that he intends to follow through with plans to make up to 50,000 civil servants fireable – thereby seizing control of what the right describes as the Deep State, or what the left would characterise as the legally constituted establishment. From Trump’s and the populists’ perspective, the establishment has had an abysmal record, causing and failing to win the war in Ukraine, unleashing migrants on Europe through the interventions in Libya, Syria and Iraq, and overseeing the impoverishment of Westerners due to competition from imported cheap labour and from energy prices that are raised in line with the green agenda. To address the fact that the establishment, including much of the bureaucracy, is operating on what the right perceives as a far-left consensus, Trump intends to purge large sections of the US civil service and replace these employees with ideological fellow-travellers.
Implications
Personnel is policy, as the American political saying goes. Replacing masses of civil servants in the energy, diversity, security, intelligence and defence establishments will be nothing short of revolutionary. The mere threat of that change is perceived by the establishment as a regime change plan. The implications can be split into three parts: political, commercial and foreign policy.
Politically, the reaction will be to find as many additional charges, court cases or allegations to throw at Trump. This is most likely to backfire, just as the raid on Trump’s residence in Mar-o-Lago backfired and all but ended Ron DeSantis’ campaign. However, such activities risk delegitimising the results of the elections should they not go Trump’s way in the eyes of his supporters. Their reaction may turn out to be more disruptive than the January 6, 2020 one day protest at the Capitol.
Commercially, these sorts of changes in personnel would open up large corporations that favour the Democrats – Meta, Alphabet, Amazon, Berkshire Hathaway and its subsidiaries, Boeing – to various lawsuits over alleged discrimination against whites, with their training materials for diversity, equity and inclusion being used against them. Furthermore, companies that are involved in defence may find themselves investigated for alleged wasteful spending or breach of contract. In addition, any form of green subsidies will be at severe risk of cancellation, while the oil and gas industry will most likely new regulatory advantages that enable it to attain rapid growth in the US and perhaps in export markets, though major infrastructure may be hampered at the state level. Moreover, companies would likely face severe restrictions on obtaining and renewing H1B visas. Industries like construction and agriculture, that have typically relied on cheap illegal labour, may struggle as a result.
Foreign policy wise, the US’ priorities may shift very dramatically, with US bases in Germany permanently shut down, and the EU being forced to accommodate at least some of the ambitions of Vladimir Putin for as long as it is incapable of providing for its own defence. Moreover, a Trump administration would have to address a key issue: voters and a part of the US establishment want the US to abandon the Middle East, but not Israel. Given Trump’s claim that he believes that Israel is the obstacle to reaching a peace agreement, his attitude towards this dilemma may diverge significantly from standard US policy. Trump may wish to borrow a page from the Nixon playbook, and allow Israel to get hammered for a little before providing any aid. Given his bombast and lack of experience dealing with Iran, Trump may lead the US to a considerably worse position in the region, to the detriment of US relations with both Israel and Arab states, especially as these have been diverging from the US due to its positions on Ukraine, Israel and local Middle Eastern issues. In that scenario, the US would have no choice but to pivot to Türkiye as its main strategic partner to counter Iran. That, in turn, may severely increase security risks in Iraqi Kurdistan, as Modad Geopolitics has explained here.
Trump announces he is considering 60% tariffs on China
Trump’s preference for a commercial war with China is clear. His priority will be to rebuild the US’ industrial base and shift the US’ trade dependence away from China even more rapidly.
Implications
Trump’s attack on the establishment rests on his perception that the foreign policy consensus has failed, that the rules of trade do not favour the American worker, and that the US is being taken advantage of and dragged into unnecessary wars. Therefore, Trump’s commitment to defend Taiwan is very uncertain. He may wish to push Japan and South Korea into that confrontation while avoiding direct US entanglement, and may wish to force the US’ Asian allies to pay for the cost of their own defence. However, Trump’s commitment to confront China commercially is unwavering.
Strategically: from China’s perspective, there has been policy continuity between Obama, Trump and Biden, starting with Obama’s pivot to Asia, Trump’s tariffs and trade war, and Biden’s sanctions intended to cripple China technologically. As such, escalation of the trade war will be perceived in China as one more step towards confrontation. This will, in turn, accelerate China’s attempts at consolidating its control over key industries and supply chains, and will spur China to both confront Taiwan AND expand access to ports that bypass the Malacca Strait, with Pakistan, Myanmar and Thailand as key partners.
Commercially: China will likely retaliate by expropriating US investors in China, most likely using stealth methods. China will also retaliate with tariffs against US exporters to China, viewing that as a means of de-risking its own supply chains in the event of a direct conflict. Its focus will be on agricultural producers who form part of Trump’s core voting base. US retailers and other importers will likely need to look to Latin America to find offshoring or nearshoring locations from which they can produce and sell wares into the US with minimal geopolitical risk. This suggests good news for Brazil and Mexico, especially.
Elections News
Trump fined $354 million in civil fraud case in NYC, banned from doing business for three years
This is a most unusual case for several reasons. First, the facts. Trump requested and received a loan secured against one of his buildings. He repaid that loan in full. The lawsuit, brought by New York’s Attorney General Letitia James, who campaigned on getting Trump, alleges that Trump inflated the value of the assets against which the loan was secured. Obviously, the bank, before issuing the loan, would have made its own valuations, and sometimes reduced Trump’s estimates of his wealth considerably. The banks, who were the supposedly defrauded party, testified to that effect as defence witnesses.
Implications: As with everything Trump, polarisation is the norm.
Legally: From a legal standpoint, it is highly unusual for someone accused of fraud, in this case, Trump, to use those he had supposedly defrauded – the banks – as defence witnesses. It is obvious that Trump did inflate the value of his assets, and it is evident that the definition of fraud in New York is extremely broad. It is not evident that Trump inflated the value of his assets to commit fraud, since he repaid all his debts. It also seems rather typical for borrowers to inflate their assets’ worth.
Politically: From a political standpoint, it is worth noting that individuals responsible for the 2008 financial crisis were never charged or tried. Charges against cryptocurrency fraudster Sam Bankman-Fried, one of the largest political donors in 2022 (and the second largest Democratic donor, after George Soros), are systematically being reduced and dropped. Trump supporters will ask, why are they getting a pass, but not Trump, and why were no charges brought against Trump before his involvement in politics?
Furthermore, it is worth recalling that, after the 1860 – 1864 Civil War, all the Confederate leadership was pardoned, with a few exceptions who had killed prisoners of war. Magnanimity is what one expects from a confident ruling regime. It appears that part of the American establishment genuinely believes that Trump is more dangerous than the Confederacy, and that their own position is more precarious than the Republicans’ position was after they had won the Civil War against the secessionist Democrats. We therefore expect them to act accordingly, and to escalate their legal targeting of Trump. Whether or not this is justified will not be determined by the courts, but by public opinion, which is extremely polarised.
From the perspective of Trump supporters, the Trump ruling reflects the continuing violation of norms by activist judges and prosecutors. They confirm the need for Trump to purge the establishment’s ranks in the civil service. From the perspective of Trump’s opponents, this reflects the mortal threat posed by Trump and his supporters, who would overlook the judiciary’s position to push their political agenda. In that sense, the ruling increases the level of US polarisation.
This split is symptomatic of post-2000 America, which increasingly faces a real crisis of legitimacy. It is worth recalling that every election since 2000 has had significant doubts cast on its results and legitimacy by the losing party. This peaked with the 2016 claims that Trump’s own election resulted from Russian interference, and Trump’s subsequent claim that the 2020 election was rigged, which was followed by the Jan 6, 2020, protests. One can therefore expect, with a high degree of certainty, that the 2024 election results will be hotly contested regardless of the outcome. If Trump wins, one can expect severe protests by BLM and Antifa throughout progressive cities, targeting federal buildings and the police with arson attacks, as well as high end retail stores for looting.
Trump wins various primaries, including Haley’s home state.
Trump has won all six of the Republican primaries so far, most recently beating Nikki Haley by 68% to her 26% in Michigan. Trump won the South Carolina Republican primary elections by 20 points, delivering a considerable blow to Nikki Haley, as she had been the governor of that state. With Haley receiving 40% of the vote there, however, she is attempting to show that she is a credible alternative to Trump, with a good enough popular base, and who could beat Joe Biden in the event that Trump dropped out due to legal or health reasons. However, this strategy is not going well. Haley ran in a largely symbolic (neither Republican nor Democratic) primary in Nevada against various unknowns. She won 31% of the vote. 63% of votes went to none of the above. The Republican party will struggle to rally behind another neoconservative candidate like Haley.
High showing for uncommitted Democratic voters in the Michigan Democratic primary highlights Biden’s vulnerability.
In the Michigan Democratic primary, the far left of the Democratic Party tried to get its supporters to vote uncommitted. There was never any chance of Biden losing the vote – he got 80%. However, the uncommitted got up to 17% of the vote in Dearborn and Detroit, heavily Arab and Muslim areas. This suggests that, in tight races in swing states, such as Michigan, Biden may put off some of the far left and the Muslims, giving an edge to Trump.
Watch For
Super Tuesday: 17 states are holding primary elections on 5 March.
There are 5 Republican primaries between 27 February and 5 March, when Super Tuesday is held. This is when Democratic primaries properly kick off, most likely with a clear win for Joe Biden. It will be very difficult for Trump and Biden’s respective rivals to remain in the race after these are held, though Haley may press on to better position herself for the possibility of Trump not running. March 12 and March 19 will also be important primary dates, with a real possibility that Biden’s and Trump’s rivals will drop out by April.
SCOTUS hearings on 22 April 2024
The Supreme Court has agreed to hear arguments on whether Donald Trump (or any president) would be immune from prosecution for official acts undertaken as president. This affects prosecutor Jack Smith’s case over Trump’s role in the January 6, 2020, protests at the Capitol. The decision to hear the case itself means that the judiciary has decided to delay ruling on the issue until after the 2024 elections, meaning that if there is a trial, it would not conclude before the November elections. SCOTUS as an establishment is political but not necessarily partisan (though some judges may be), in that it avoids open confrontations with the public, Congress or the presidency as much as it can. Delaying the issue means that the judiciary cannot be blamed for the election results, whatever the outcome.