“Virginia and New Jersey’s gubernatorial elections next month could offer a snapshot of where the two parties stand heading into the 2026 midterm elections. Rather than focusing on the outcomes alone, however, it’s important to consider the margins of victory relative to the 2024 presidential race.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies
The Cozen Lens
- Voters head to the polls to elect governors in Virginia and New Jersey next month, the highest-profile races before next year’s midterm elections.
- The latest flare-up between the US and China highlights the ever-present instability in the relationship that will make securing a comprehensive agreement between the world’s two largest economies difficult, even if President Trump and Chinese President Xi Jinping’s meeting later this month occurs without incident.
- With China flexing its advantage in critical minerals in trade talks underscoring dependence on them, the US as well as private companies are seeking to mitigate China’s leverage.
What We Can and Can’t Learn from the VA and NJ Elections
Off-Year Elections. The 2026 midterms are over a year away but gubernatorial races in two states next month may have attributes of bellwethers.
- Virginia and New Jersey are the only states that elect their governors the next November following the presidential election. These races may serve as an indicator of voters’ feelings a year into President Trump’s second term.
- The Washington Post reported that the Democratic National Committee will hold off on releasing its 2024 autopsy until after the November elections. The Democratic Virginia and New Jersey gubernatorial candidates, former Rep. Abigail Spanberger (D-VA) and Rep. Mikie Sherrill (D-NJ), have similar backgrounds as moderates with national security experience first elected to the House in the 2018 Democratic wave. As the Democratic Party searches for an identity post-2024, a Spanberger or Sherrill win could boost moderates, while the party’s left flank could cite a loss as justification for moving the party in a more progressive direction.
- While these races will provide some data points ahead of the midterms, it’s important to understand that they may not be perfect bellwethers. Even though politics is increasingly becoming more nationalized, gubernatorial races often focus on more local issues specific to their states. Candidate selection can also make a difference.
The Old Dominion. Virginia’s gubernatorial race has long been seen as a bellwether. As with the first midterms of a president’s term, historical trends favor the candidate whose party does not control the White House.
- This year, Spanberger is facing off against Lt. Governor Winsome Earle-Sears (R-VA). Spanberger has consistently led in polling and the most recent RealClearPolitics polling average has her up by 6.5 points. If Spanberger wins, her margin of victory will be worth watching. A high margin would send a stronger message of voter dissatisfaction under Republicans while a closer result would not yield as clear of a message.
- There are some wildcards in the Virginia race, though. This year’s DOGE cuts and the ongoing federal government shutdown could create headwinds for Earle-Sears due to the concentration of federal employees in the Old Dominion. Recent reporting on violent texts sent by the Democratic nominee for attorney general, former state Delegate Jay Jones (D-VA), could drag down others on the Democratic ticket.
- The Virginia race may also provide an indication of whether education and transgender rights, issues that Governor Glenn Youngkin (R-VA) and Trump seized upon in their winning campaigns in 2021 and 2024, respectively, continue to resonate with voters. Earle-Sears has emphasized policies relating to transgender students in her campaign and if she overperforms polling, that could convince Republicans that a focus on the culture wars may make for effective messaging for the midterms.
The Garden State. Though theoretically a bluer state than Virginia, New Jersey is home to a more competitive gubernatorial race, which could serve as a bellwether.
- New Jersey has a history of electing governors from both parties and before incumbent Governor Phil Murphy (D-NJ), a Democrat hadn’t won re-election in decades. The state shifted rightward both in the last gubernatorial race in 2021 and in last year’s presidential race. According to the most recent RealClearPolitics polling average, Sherrill leads her Republican opponent, former state Rep. Jack Ciattarelli (R-NJ), by only four points.
- Affordability is a major issue in the race, particularly rising electricity prices. In 2024, the economy and inflation were strengths for Trump’s presidential campaign. The New Jersey election may give an indicator of whether Republicans or Democrats have more of an edge on cost-of-living concerns in 2025.
- The race has become bitter, as shown by a recent debate. Sherrill has attacked Ciattarelli over his medical publishing company and the opioid crisis, while the recent release of Sherrill’s military records has scrambled the race.
The Endless US-China Loop
A Matter of Trust. While the trade tensions that emerged between the US and China after President Trump’s second inauguration have been relatively in check until the most recent spat began less than two weeks ago, there is an ever-present sense of distrust and competition underlying the bilateral relationship that makes lasting stability difficult to achieve.
- This recent flare-up stemmed from China’s proposed export controls on rare earth minerals and the US’s threat of new 100 percent tariffs. The US has argued that China is the aggressor in this case, jeopardizing the truce between the two countries. However, Beijing has contended that the US’s previous change to the treatment of subsidiaries on the Commerce Department’s Entity List was the first provocation.
- This back-and-forth underscores the complexities endemic to the efforts by both countries to disentangle from each other, even during times of relative calm. Not all of these actions result in escalatory spirals; the recent changes in port fees took effect with minimal drama. However, the recurring loop of heightened tensions followed by de-escalatory negotiations highlights the constant level of mistrust between the US and China.
Sitting Down to Talk. Despite this latest escalation, the US and Chinese leaders have indicated that they want to proceed with the expected summit between President Trump and Chinese President Xi Jinping later this month on the sidelines of the Asia-Pacific Economic Cooperation leaders’ summit.
- The meeting between Trump and Xi has been highly anticipated as it will be their first in-person interaction since Trump’s return to office. While expectations for the summit were already low, given that the meeting itself was the primary deliverable, this is now especially true following the recent rise in tensions.
- The summit between Trump and Xi also comes just ahead of the November 10 deadline for renewal of the recurring 90-day pause on increased tariffs that was first established following this past spring’s trade tensions. While an extension may not be agreed to as part of their conversation, the leaders will likely signal that there will be another renewal. However, what could represent a potential breakthrough is any hint of extending the pause with a duration longer than 90 days.
An Eye Toward the Future. Still in the background of these moments of tension, there are indications that Trump and Xi are both interested in securing a comprehensive deal, but doing so will likely be difficult.
- Hopes for a comprehensive agreement between the US and China are likely misplaced, as the sustained stability and level of trust required to secure such a deal will be challenging to develop. However, smaller agreements, such as those Trump was able to obtain during his first term, are possible. One such agreement in the near future could involve trading a reduction in tariffs placed on China ostensibly for its role in the fentanyl supply chain in return for increased purchases of American soybeans, imports of which China has completely shunned since May.
- Also compounding these challenges in reaching a deal is a split perception on which country has more leverage in the negotiations and which has a higher pain threshold. Leaders in each country have contended that they are in a stronger position. However, the White House’s arguments appear to be coming up short, as they were forced to blink first in the trade war earlier this year. While China faced its own economic pressures during this conflict, the political pressure arising from next year’s midterm elections and from the swooning financial markets put Trump in a more challenging position, despite what senior White House officials have argued.
How Critical Are Critical Minerals?
China’s Trump Card. Although China is unlikely to pursue the nuclear option of cutting the US from critical minerals entirely, its leverage is real.
- There is no “objective,” universal list of critical minerals; what makes a mineral “critical” depends on the necessity of that material for vital supply inputs at a given point of time. Rare earth elements are a subset of critical minerals, referring to a group of several metals on the periodic table. In spite of their name, rare earth minerals are not, by-and-large, actually “rare.” Think of these commodities like oil; lots of countries have significant reserves of oil on paper, however, there are some regions of the world whose deposits are much more readily available at lower costs than others. And much like the raw petroleum sludge pumped out of the ground, minerals typically have to be heavily filtered and refined from the surrounding detritus. Each critical mineral is found in different places, requires different processing, to be used in different end cases.
- The impact of a total threatened ban of these minerals from China ranges the gamut. A former senior policy advisor for the Office of Science and Technology Policy under Trump told Politico, “one of my nightmare scenarios. It would mean no more AI scaling, and quite possibly, the U.S. growth rate slows down a lot or we even possibly go into a recession because of this.” China’s furthest leverage over minerals is their increasing dominance the further the value chain goes. Their monopoly grows stronger as it moves from mining, to filtering, to refining, to the incorporation of rare earths into magnets; for certain end products, almost every stage from mine-to-magnet happens within China.
Limits to the Leverage. In light of China’s increased willingness to flex its leverage over its critical minerals supply, both the US and private companies that rely on them are investing time and resources in mitigating China’s leverage.
- In reality, the full threat is both unlikely and thoroughly uncomfortable, albeit not the end of the world. The rare earth market is only approximately $5 billion; much like vitamins, they are crucial inputs but not ones required in large quantities. For another thing, the threat of a full export ban is like a “one-shot bazooka,” a self-defeating tool that would undermine its long-term dominance by creating a situation where the rest of the world would have no choice but to create their own independent supply chains. The threats of export controls are more readily understood as the backstop that China can threaten that can force the US back to the negotiating table if they see overreach. That doesn’t mean that China isn’t also utilizing the intransparent system to maximize its own power — there are no comprehensive datasets but various sources put approvals of critical minerals between only 25 and 50 percent, subject to lengthy delays and extensive reporting requirements.
- That said, the impacts can still be real while the two sides haggle it out even if a(nother) compromise is reached, especially for semiconductors. Ford, for instance, publicly warned it could be forced to idle a factory if rare earth supplies tighten further. Stockpiling is a necessary but insufficient strategy that would likely last months at best (and that’s if domestic refining capacity exists, which often isn’t the case). Actual and full independence from reliance on Chinese supplies is a process well underway (by both governments and private firms) but will take several years at the least.
