As Australia ponders how to deal with a castrated Trump administration, one lesson is clear: ‘It’s the economy, stupid’

As Australia ponders how to deal with a castrated Trump administration, one lesson is clear: ‘It’s the economy, stupid’ Zoe Daniel Donald Trump’s crushing defeat in the US midterms over cost-of-living pressures is a warning for politicians closer to home

Fascinating, isn’t it, that for all that Donald Trump has got away with, it’s arguably the cost of fuel that’s finally led to an absolute rout in the midterms.

So many Americans held their noses at so many other things, but in the end his own decision-making on Iran will haunt the rest of his presidency.

And it’s not so much the broken promise on ending the forever wars: it’s a rebirth of the old phrase “it’s the economy, stupid” that our own government will note. In the end, it transcends just about everything else.

In the US, the cost of petrol is much lower than in Australia generally, but gasoline is up 40% since last year. The price of diesel has jumped a massive 71%, hitting record highs in almost all states , since the start of the war in Iran and the disruption of shipping through the strait of Hormuz.

This has whacked families, farmers and industry in key battleground states, affecting primary producers and manufacturers – some of whom are already hurting due to the variable impact of Trump’s tariffs on Chinese trade and fertiliser prices.

These are the very people I spoke to when I covered Trump’s first administration: everyday Americans prepared to overlook their misgivings about his character in favour of what they thought he could deliver in the form of American exceptionalism.

Of course, that’s not the only factor. The extraordinary Senate result in Texas , with its big Latino community – last won by a Democrat 38 years ago – is likely also tied to a backlash against Trump’s hardline immigration policies and weaponisation of ICE. Reflecting that, Gina Hinojosa has become the first Latina governor of Texas in a history-making moment .

It appears that Trump’s own actions on immigration and the economy have sent those who swung to him in 2024 back where they came from in droves.

The result is a slap for Elon Musk too, the biggest individual donor in the midterm cycle, who spendt US$446m trying to influence the results (mostly in Texas). The diversity of those elected, in ethnicity, sexuality and gender is another rejection.

From North to South Carolina to the bellwether state of Ohio to Kansas, voters have punished Republicans, delivering both the House and the Senate to the Democrats.

The cost of living has fed increasing anger in the US over both real and perceived government corruption and the widening wealth gap, the power of big tech and the rollout of datacentres. The issues are very similar to those dominating the political agenda here in Australia.