Cozen Currents: Is Three a Crowd?

“Elon Musk is the richest man in the world and has repeatedly defied naysayers in accomplishing what was deemed impossible. But even for Musk, establishing a viable and sustainable third political party to rival the GOP and Democrats is going to be a steep uphill battle.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• Elon Musk has announced his desire to build a third party but money alone isn’t enough to build a sustainable third party in modern-day America.
• Uncertainty is a feature, not a bug, of President Trump’s trade policies, and the dizzying array of tariff threats underscores the never-ending questions and instability that the actions raise.
• House Speaker Mike Johnson (R-LA) and GOP fiscal hawks are already talking up the possibility of passing a second (and even a third) reconciliation bill before the midterms, but neither time nor legislative history are on their side.

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What It Would Take to Build a Third Party

The America Party. After his split with President Trump, Elon Musk has announced an effort to establish a new third party.

• In an announcement on X earlier this month, Musk declared that “when it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy” and he was founding the America Party to “give you back your freedom.” This move comes after Musk criticized Trump’s “one big, beautiful bill” for increasing the deficit. Musk said that the effort would focus on two or three US Senate races and eight to 10 congressional races.
• Musk’s party is expected to promote fiscal conservatism but it’s unclear what other policy positions it could adopt. The America Party could have an opening by embracing a perspective not fully represented in either of the two major parties but held by many in Silicon Valley and the business community, such as those who believe in deregulation, free trade, H-2B visas, and cracking down on the national debt.
• Gallup polling last year indicated that 58 percent of Americans want a third party, including 69 percent of independents, which suggests that Musk has an opportunity. When it comes time to make a choice in the voting booth, though, most Americans opt for one of the major parties. The New York Times/Siena College poll found that 91 percent of registered voters liked Trump or former Vice President Kamala Harris.

Third Parties in Context. Musk faces historical headwinds in creating a durable third party.

• On the national level, the most successful campaign outside of the two-party structure in modern political history was Texas businessman Ross Perot’s 1992 bid for president, in which he won nearly 20 percent of the vote. Yet due to the winner-take-all nature of the Electoral College, he didn’t win any electoral votes. Perot parlayed his presidential run to create the Reform Party, which notched a win with the 1998 election of Jesse Ventura as governor of Minnesota but failed to gain traction over the long term. Third-party presidential bids by George Wallace in 1968, Robert M. La Follette in 1924, and Theodore Roosevelt in 1912 netted electoral votes but far from a majority and the parties did not endure beyond these candidates.
• More commonly, third parties are thought to play a spoiler role, such as in 2000, when Ralph Nader’s Green Party presidential run is thought to have cost Democratic candidate Al Gore the state of Florida and the Electoral College.

Challenges Facing Third Parties. Creating a new party won’t be easy for Musk.

• While some jurisdictions have adopted ranked-choice voting, the majority of US elections follow the first-past-the-post system, in which the candidate with a plurality of votes wins. This favors the two major parties and makes it harder for a third party to break in.
• Ballot access is perhaps the most formidable obstacle for Musk in fielding candidates. Different states have their own rules. New parties must meet signature requirements, which can be onerous. For example, Georgia mandates congressional candidates not affiliated with the major parties to collect 27,000 signatures. In a Politico interview, former Perot advisor Russell Verney said ballot access was a “humongous job” that leads third parties to “exhaust themselves both financially and resource-wise.” Similarly, Musk’s party would have to overcome gatekeeping thresholds for debates, which are often based on polling.
• Musk would also have to build a party organization from the ground up. Most experienced political operatives are affiliated with one of the two major parties and jumping ship would mean burning bridges. This limits the pool of talent that he can access.
• Finally, Musk’s third party would likely face opposition from the major parties, which could include legal challenges to ballot access and negative advertising. A former DOGE advisor and Trump ally founded a new PAC to defend the president’s interests against Musk. Its name, FSD PAC, stands for Full Support Donald but also winks at Tesla (Full Self-Driving).

The Elusive Quest for Trade Certainty

Reciprocal Tariffs Steal Spotlight. Last week’s letters from President Trump announcing tariff rates set to take effect on August 1 appear to be a negotiating tactic and a face-saving way to extend the deadline of the original 90-day pause.

• The rates Trump announced in these letters largely reflect the original duties that were set as part of the president’s Liberation Day announcement, furthering the perception that these are just an extension of the current deadline. The major exception to this is Brazil, which Trump threatened with 50 percent tariffs. This move is more about politics specific to Brazil than economics though, making it a clear one-off.
• Trump has insisted the August 1 deadline is firm, but the White House has made clear the rates are not final and they are willing to consider lower duties. There is a possibility that frameworks will be agreed upon soon with the EU and India. However, letter recipients will likely see talks stretch until closer to the August 1 deadline. Notably, the deal reached with the UK and the claimed agreement with Vietnam appear to set the White House’s target bounds for reciprocal rates between 10 and 20 percent.
• While there is some belief that Trump could again extend negotiations past the August 1 deadline, there is a risk that he looks to ensure his threats remain credible and so chooses to enact at least some of the tariffs he has threatened. Which countries are the most likely targets will become clearer as the deadline approaches, but foreign leaders will likely look to avoid the outcome as much as possible by making a strong effort to reach a deal in the next three weeks.

Sectoral Tariffs Ready for Prime Time. In addition to the recurring threat of Trump’s reciprocal tariffs, the sectoral duties that had been lurking in the background appear poised to emerge soon.

• Trump announced last week that copper tariff rates would be set at 50 percent and hinted that pharmaceutical duties may be as high as 200 percent. These initial rates are significantly higher than the 25 percent that Trump had previously set as the starting point for sectoral tariffs, and the decision suggests that other future sectoral tariff rates could also be initiated at a higher rate than 25 percent. Comments from Commerce Secretary Howard Lutnick suggest that duties on semiconductors are likely to be announced soon, and potentially be enacted later this summer.
• The Trump administration is planning for these new duties to be permanent, so some amount of relief is expected. What will be important in determining the ultimate impact of these duties is the details, including what exemptions are provided, what derivative products are included, and whether there is a transition period during which tariffs will be withheld. The lack of specificity so far has also made trade negotiations difficult, as countries seek relief from these sectoral duties beyond establishing reciprocal tariff rates; however, the missing details have made forming specific requests a challenge.

The Dance of Superpowers. The White House has struck a tenuous truce in its trade war with China, but the long-term path forward for the world’s two largest economies is still murky and filled with risk.

• The next senior leadership meeting between the two superpowers appears likely to occur in early August, ahead of the August 12 end of the 90-day pause on increased tariffs on China. Higher duties are unlikely to snap back into place, so long as there is a sense from both sides that good faith negotiations are continuing, avoiding any immediate re-escalation of the trade war that resumed this past spring.
• Still, even if higher tariffs are unlikely, new export controls and the inclusion of transshipment provisions in deals between the US and other countries could irk China and threaten this current truce. More likely than maintaining this truce for the rest of Trump’s term is that the US-China relationship will take on a cyclical nature where it goes between periods of tension and periods of calm, varying based on actions taken by either side, seen as too provocative not to respond.

A Second (and Third) Bite at the Apple?

Three Big Beautiful Bills. Only two days after President Trump signed the One Big Beautiful Bill Act into law, House Speaker Mike Johnson (R-LA) took to Fox News to suggest that Congress’ GOP majorities could deliver a second party-line reconciliation bill this fall and a third ahead of next year’s midterm elections.

• For Johnson, the promise of additional reconciliation bills is part of his strategy to mollify GOP fiscal hawks who only begrudgingly voted to pass the One Big Beautiful Bill Act earlier this month. Johnson first floated the idea last month, suggesting that additional reconciliation bills would be part of the GOP’s multi-step effort to reduce the deficit, a key concern of fiscal hawks who saw the deficit impact of the One Big Beautiful Bill Act balloon to roughly $3.4 trillion as it worked its way through the Senate.
• While Johnson has been unwilling to specify what would be included in a second reconciliation bill, fiscal hawks haven’t been shy when it comes to sharing their own ideas. House Freedom Caucus member Ralph Norman (R-SC) told the Hill in June “that he’d hope a second bill would do more to tackle rolling back green energy tax credits and make further spending cuts.” More recently, Rep. Warren Davidson (R-OH) suggested that the GOP could use the second reconciliation bill to cover all of FY26 spending, eliminating the need to negotiate annual appropriations bills with Democrats. Even Rep. Jodey Arrington (R-TX), chair of the House Budget Committee, recently predicted that a second reconciliation bill could be used to advance some of the policy changes that were dropped from the One Big Beautiful Bill Act for violating the Senate’s Byrd Rule.
• Although it’s House fiscal hawks who’ve made the most noise about the possibility of a second reconciliation bill, a handful of GOP senators are buying into the idea as well. Senator Ron Johnson (R-WI) told Politico this month that a key reason he voted for the One Big Beautiful Bill Act was because of a promise from the White House to pursue further Medicaid cuts, likely via a second reconciliation bill. Senate Finance Committee Chair Mike Crapo (R-ID) separately told Politico “I’ve always been in favor of a three-bill strategy and there’s a ton of things that we need to do,” while the outlet notes that other Senate Finance Committee members are already looking at policies that could be included in a second party-line package.

The Missing Ingredients. Despite all of the talk of additional reconciliation bills within GOP circles, the key catalysts that made the One Big Beautiful Bill Act possible don’t exist this time around.

• Although the GOP’s One Big Beautiful Bill grew to become much more than a tax bill, at its heart, it was an extension of the expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA). Because those tax cuts were set to expire at the end of this year, a scenario that would have increased rates on roughly 62 percent of Americans, GOP lawmakers had strong political incentives to stave off their expiration. With the expiration of the TCJA cuts addressed by the One Big Beautiful Bill Act, there’s no looming fiscal cliff to serve as both the foundation of and the deadline by which to get a second reconciliation bill done.
• Another challenge is that GOP lawmakers used up all of the politically palatable spending cuts that could be included in a reconciliation bill as part of the One Big Beautiful Bill Act. A second bill centered around even steeper cuts to programs like Medicaid would be an extremely heavy lift politically on Capitol Hill.
• And despite Davidson’s comments, discretionary spending cannot be addressed via reconciliation due to the Senate’s Byrd Rule, meaning that the annual appropriations process, which addresses discretionary spending, can’t simply be bypassed with reconciliation bills. Instead, Congress will be stuck with a messy FY26 appropriations process complicated by President Trump’s rescissions package and Democrats’ subsequent threats to shut down the government.

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