Cozen Currents: It’s (Still) the Economy, Stupid

“While the White House and Republicans are leaning into hot button issues such as immigration and crime, midterm voters are likely to vote with their wallets.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• While history would suggest that the out of office party is favored to outperform the presidential party in the 2026 midterm elections, the size of that overperformance (or whether it materializes at all) will be shaped by a set of kitchen table issues the two parties are already racing to define.
• The Trump administration’s full-court press to entice drugmakers to lower their prices culminated in deals with Pfizer and AstraZeneca that other firms might try to copy.
• After President Trump’s initial wave of tariffs, the US’s relationships with its North American allies have started to improve but deals to lower these duties have proven elusive, with the White House likely to use them as leverage in the USMCA negotiations next year.

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What Midterm Voters Will (and Won’t) Care About Next Year

The Battlefield of Ideas. The midterm elections often serve as a referendum on the president’s performance in office, in particular, his performance on the issues that helped sweep him into the White House in the first place.

• Back in 2024, exit polls found that the defining issues of the presidential election were inflation and the cost of living along with immigration and the border, on both of which voters tended to favor the GOP and President Trump. Fast forward to October 2025 and the playing field of key issues hasn’t shifted much: a poll released by CBS News last week found that 27 percent of voters believe jobs and the economy are the most important issue facing the nation followed closely by inflation at 21 percent. The only other two issues to crack double digits in the poll were healthcare and immigration.
• While the issues that appear set to define 2026 are similar to those that defined 2024, voters’ perception of which party is best equipped to address those issues has shifted dramatically. In a September poll released by Cygnal, voters laid more of the blame for current inflation levels on the GOP than on Democrats. A majority of voters went on to tell Cygnal that they believed inflation had worsened since Trump took office, partly a function of negative perceptions of Trump’s tariff policy. Those concerns are similarly reflected in Silver Bulletin’s polling averages which show that Trump’s net approval rating on the economy and inflation have each dropped roughly 20 points, respectively. The GOP still retains its edge on hot button cultural issues according to a slate of late September polling from the Washington Post and Ipsos which found that voters strongly prefer the party’s stance on immigration and crime.

Focusing the Message. With the issue polling in hand, GOP candidates are working to raise the salience of cultural issues while Democratic candidates are working to restore voters’ trust in the party.

• Aware of their party’s struggles on the economy, GOP candidates for office are leaning into issues where polls indicate they have an edge, talking up the reduction in border crossings and portraying Democrats as soft on crime. The challenge for the GOP is that while independent and swing voters in 2026 view immigration in particular as a top issue, they don’t approve of the president’s handling of it. Silver Bulletin’s polling averages show Trump with a net approval of roughly negative five points on immigration while the Cook Political Report notes that recent surveys find only 40 percent of independent voters support the president’s immigration policies.
• While polling suggests that voters have soured on Trump’s economic message, that doesn’t mean they’re immediately gravitating toward Democrats to solve the problem. Decision Desk HQ’s polling average shows that the Democratic brand is hovering around its lowest rating at any point this year at about negative 20 points on net. In response, Cook Political Report notes that Democratic candidates are striking a populist note on the campaign trail, blaming not only Trump for the country’s economic challenges, but also making an appeal to voters that they alone can fix broader structural defects that favor corporations and the wealthy over everyday Americans.

Congress’ Messaging Campaign. With must-pass bills few and far between, lawmakers in both parties are using legislation to highlight their parties’ strengths or counter perceived weaknesses.

• There’s no better example of a party picking an issue-related messaging fight ahead of the midterms than the current government shutdown. While Democrats fundamentally forced the shutdown in response to Trump’s expansion of executive power, they chose to narrowly focus their shutdown messaging on the GOP’s cuts to healthcare funding. By demanding that the GOP extend expiring Affordable Care Act premium subsidies as a condition of reopening the government, Democrats are raising the salience of an issue a majority of voters in both parties want solved according to polling from KFF.
• To parry Democrats’ healthcare attacks, House Speaker Mike Johnson (R-LA) and other GOP lawmakers are tying the issue to immigration, a strong suit of the GOPs. GOP lawmakers are also looking to go on the offensive when it comes to the economy, touting the benefits of the party’s One Big Beautiful Bill Act which Trump signed into law in July. As part of the messaging push, the party is working to rebrand the bill as the “working families tax cut” act. Lawmakers are also putting pressure on the Treasury Department to quickly enact popular components of the bill, such as the “no tax on tips” provision, well ahead of the midterms.

Trump’s Quest to Lower Drug Prices

How to Reach a Deal in One Summer. Over the course of the year, President Trump has been gradually ramping up the pressure on pharmaceutical firms to come to a deal to reduce prescription drug prices.

• Almost nine-in-ten Americans say the price of prescription drugs is too high, according to an April survey from Trump’s 2024 campaign pollster. Majorities say they’ve either had trouble affording their meds or choosing to stretch or not buy drugs because of the cost in the past year. The vast majority believe drug company profits are the primary culprit and over 90 percent say it’s important for the government to do something to reduce costs.
• The reflection of this overwhelming impulse in politics is hardly a surprise. Politicians of both parties regularly talk about how they’ll reduce drug prices. During President Trump’s first term, he attempted to strike an ambitious deal with the pharmaceutical industry to do just that; when that fell through, he initiated a regulatory plan to set the prices Medicare compensates drugmakers at what other countries pay. The Inflation Reduction Act under President Biden established a program empowering Medicare Part D to negotiate the price of selected drugs; this program boasts broad support from voters and has been largely left untouched by the Trump administration.
• Since entering office earlier this year, Trump has engaged in a reprise of his first-term strategy: putting on a full-court press and seeing if he can get companies to come to a voluntary deal first before proceeding with regulation. Sticks included both threatened 100 percent tariffs on branded products (waived for pharma firms expanding US production) and a resurrection of the previous most-favored-nation (MFN) drug pricing proposal, now known as the Global Benchmark for Efficient Drug Pricing (GLOBE); carrots featured streamlined drug approvals and the government’s promise to use tariffs to help firms increase their product prices abroad. Pressure hit a peak in late September with the administration clearly aiming to resolve the situation imminently (and in time for the midterm elections). The sector was trading at over a 40 percent discount relative to the rest of the market by forward earnings, a multi-decade gap.

Trump’s Prescription for the Industry. The administration struck deals with Pfizer and AstraZeneca and hopes it can quickly get other firms to come to similar agreements.

• Down-to-the-wire negotiations capped the conclusion of months of talks and a close relationship between Trump and Pfizer CEO Albert Bourla. The White House had made the decision early to structure negotiations with companies on an individual basis. Pfizer and the administration announced a deal at a press conference on September 30th.
• The White House got promised commitments towards the four items it asked for in letters sent to 17 pharmaceutical firms in July (though specific terms of the agreement remain confidential). Pfizer promised to sell its full portfolio to Medicaid at MFN prices, as well as selling any new products launched in the US at MFN prices to all payers, both government and commercial. The firm also expanded its direct-to-purchasing business by promising to participate in a government-run website (“TrumpRx.gov”) where patients can buy straight from the drug company. Lastly, it agreed to “repatriate” revenue earned abroad, including $70 billion in investment in the US over the next few years. In return, Pfizer earned a three-year exemption from any sectoral tariffs on pharmaceutical imports, the ability to count US manufacturing investments in younger and future products for the sake of the deal, and “certainty and stability” around future drug pricing initiatives.
• The market response to the deal was overwhelmingly positive. Pfizer’s stock rose almost 15 percent in the five trading days following the announcement and pharmaceutical stocks topped off their best week in 23 years (though some drugmakers more reliant on Medicaid sales closed slightly down following the announcement). Other pharmaceutical firms hope to score deals of their own on similar terms soon, such as the one involving AstraZeneca that the president announced last Friday, spurred by repeated requests from the White House. While the market believes Pfizer’s deal and those that follow have provided much-needed relief to industry reservations, at least two agenda items remain unresolved: the continued regulatory progress of the GLOBE proposal and possible tariffs on generic medications. Although the US trade representative hinted the latter could be in the pipeline, the White House recently emphasized that while the decision wasn’t final, the administration is not currently planning on imposing duties on generics.

North America First

The Great White North. After a rocky start, the relationship between President Trump and Canadian Prime Minister Mark Carney is on an upswing, bringing increased hopes for a deal between the two leaders.

• Following the initial trade conflicts, the US-Canada relationship during Trump’s second term appears to have taken a marked turn for the better after the recent meeting between the two leaders. Trump went so far as to endorse Carney as “a world-class leader.”
• Still, a bilateral deal between the two countries that would resolve some of the trade tensions has been elusive. Maintaining these positive feelings between Trump and Carney is a requirement for an agreement to be struck that would likely include a reduction in some of the new tariffs, but good vibes alone will not be sufficient.

The Land of the Sun. On the other hand, Trump’s relationship with Mexican President Claudia Sheinbaum has been relatively strong since the start, despite potential flashpoints, with much of the credit likely due to the differences in how Sheinbaum has approached Trump compared with the initial overtures from Canada.

• One of the significant early steps that Sheinbaum took to ensure a favorable standing with Trump was not to pursue tariff retaliation in return for any of the US’s increased duties. Instead, Mexico is now considering increasing its tariffs on goods from China and some other Asian countries, a move seen as a way to win favor with Trump.
• However, like Canada, any bilateral deal with the US to lower the tariffs imposed on the country has proven hard to reach, with the recently announced tariff on heavy trucks causing particular concern. Sheinbaum’s longer history of a positive relationship with Trump likely gives her a slightly higher chance of a deal with Trump, but it is still no guarantee.

The Elephant in the Room. Hanging over these bilateral talks is the expected push from the Trump administration to renegotiate the US-Mexico-Canada Agreement (USMCA) at its review next summer.

• While some of Trump’s new tariffs may not be resolved as part of any new agreement reached, it is doubtful that Trump will strike deals to lower them without a wider plan in place, as he would likely see doing so as giving up leverage in those negotiations. So, while Carney and Sheinbaum will likely continue to look for agreements to lower the US’s tariffs, these efforts will likely yield little result until a broader trade deal is reached.
• Expectations are high that the US will trigger the USMCA’s mechanisms for renegotiations, with a report due from the Office of the US Trade Representative early next year likely to outline many of the changes that the Trump administration will seek. Trump and US Trade Representative Jamieson Greer have also floated the possibility of replacing USMCA with bilateral deals due to the unique aspects of the US’s relationship with Canada and Mexico, respectively, but this currently does not appear to be a likely path forward and instead is more likely a negotiating tactic.

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