Cozen Currents: The Genius of Stability

“In contrast to the adversarial posture that President Donald Trump took toward China during his first term and the start of his second term, last week’s summit with Chinese President Xi Jinping underscored the emphasis that Trump now places on maintaining what both sides refer to as a ‘strategically stable’ relationship.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• The Trump-Xi summit projected stability and goodwill but delivered few concrete agreements. There was positive momentum toward a fall Washington summit, though underlying tensions and unresolved issues are reminders of the relationship’s fragility.
• Historically, the high price of gas translates into an equally high political cost for the party in power.
• Congress will begin considering the FY27 National Defense Authorization Act (NDAA) this summer. The NDAA authorizes Department of Defense activities but as a must-pass bill, it can also serve as a legislative vehicle for lawmakers’ priorities that have some nexus to defense.

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Looking for a Stable Relationship

Style Over Substance. The Trump-Xi summit met its modest goal of projecting stability and goodwill, but produced few concrete agreements.

• Coming into the summit between President Donald Trump and Chinese President Xi Jinping, expectations for deliverables were set low. The top focus had been a successful event that would reinforce the current sense of stability in the relationship. On this latter goal, the meetings were largely successful with both Trump and Xi praising each other and urging mutual respect between the US and China.
• Despite the low expectations, there was still a sense that Trump and Xi underdelivered, with very few details provided on many of Trump’s announcements and relatively few concrete items agreed to. Still, on issues like the Board of Trade, Board of Investment, and AI guardrails, all indications are that conversations will continue, which remains a positive.

Eyes to Possible Fall Summit. Positive momentum for the US and China continues with a planned Washington summit, but unresolved issues, such as an extension of the current trade truce, will face scrutiny in the months ahead.

• Trump extended an invitation for Xi to come to Washington in late September, further underscoring the positive feelings in the relationship. This would represent a second major in-person summit between the two leaders, but it may not be the last. There will be two multilateral conferences later this year in the US and China that could see meetings on the sidelines between the two presidents.
• Despite the relatively few deals from this summit, the dialogue is poised to continue in the months ahead, with neither country’s objectives likely to change. One item to watch for at the fall summit will be an extension of the current trade truce between the US and China, agreed last October in South Korea, which was not addressed last week.
• When Trump hosts Xi in the US, he could also look to announce some amount of inbound Chinese investment to the US. However, doing so will face bipartisan political scrutiny, with questions raised about the structures of any such deals. Additionally, there will be concern in some sectors about the possibility of cheaper competitors entering the US market, as was the case in the auto sector in recent weeks ahead of Trump’s visit to Beijing.

The Fragile Peace. Despite the summit’s positive tone, underlying tensions over issues like Taiwan can quickly cause the relationship to deteriorate.

• While the overarching tone of the Trump-Xi summit was largely positive, it was clear that fundamental tensions in the relationship remain, such as over Taiwan. Xi also urged both countries to avoid the so-called Thucydides Trap, which is the idea that wars become more likely when ascending powers threaten the geopolitical standing of incumbent powers. Xi has raised these concerns in previous summits with US presidents since coming to office, and this invocation reflects his perception of the US as a superpower in decline.
• Although these tension points were not the dominant story of the summit, they remain as obstacles to peaceful coexistence. There is ample evidence from the past of how quickly the US-China relationship can backslide. The current period of relative calm appears set to continue for the next few months, but it is not guaranteed. These risks include China hawks in Congress pushing Trump to take a more aggressive stance toward Beijing, which may require the White House to expend political capital to kill these efforts.

The Political Cost of Gas

Fuel for the Political Fire. A few factors make fuel a uniquely salient price point for American households.

• A year ago, regular gas averaged $3.180 a gallon nationwide. A month ago, it was $4.118. A week ago, it was $4.558, and it remains around that price today. Recent evidence shows politicians think that this really The very first thing former President Biden’s chief of staff used to do every morning after rolling out of bed was check the AAA.com price tracker. During President Trump’s February State of the Union address, he touted that gas was below $2.30 a gallon in “most states” (although independent fact checkers disputed this claim). During the last presidential election, candidate Trump repeatedly castigated the administration for high prices; now he finds that the shoe is on the other foot, with Democrats willing to pick up his prior complaints. But does it really make a difference politically?
• The devil’s advocate case that it does not would note that only three percent of a household’s spending goes towards gas. On an inflation-adjusted basis, the price of gas appears more restrained in the historical context.
• But there are multiple reasons to believe that gas is a politically important commodity. First, the fuel required for necessary trips to the grocery store or to work is one of the least discretionary expenses. Second, it’s a pain point that hits lower-income households the hardest. They have the least room in their budget to accommodate the hikes and spend proportionally more of their income on it. Another analysis pegs the average gas burden at seven percent of total income, rising to around 14 percent for low-income households. The Federal Reserve has released research showing that while higher-income brackets haven’t changed their spending habits much, the working class has had to cut back on gasoline consumption. Third, it’s an unusually salient price point. Few other goods have their prices so frequently displayed on large signs wherever one goes. Energy shocks hit the entire economy, lowering GDP growth, private consumption, and investment.
• Especially pernicious are the indirect effects that later trickle through the supply chain. The construction, fishing, and farming sectors rely on diesel machinery, but many other industries’ products also incorporate diesel into shipping costs. More than three-quarters of commercial trucks use diesel engines, and diesel prices have increased more than gasoline prices. A 40 percent surge in diesel prices results in an overall freight cost increase of about 10 percent, and that’s before considering how homes’ decreased spending may itself reduce shipping demand.

The Hard Facts. Evidence says the relationship between gas prices and approval ratings has decreased in recent years, but this time may be different.

• Looking at the period from 1976 through 2007, researchers found that a 10-cent increase in gas prices was associated with a 0.6 percentage-point decline in presidential approval. But another analysis from the Center for Politics finds that although the two were once more closely correlated, the relationship has weakened over the past 15 years. Looking at the subset of data from 2009-2025, the explanatory power of gas prices on approval essentially disappears. Part of this is due to increased partisanship, but an underrated factor may be that the oil intensity of US real GDP has fallen by more than 50 percent since 1973. Political affiliation has been show to bias people’s views of the economy. Is the same true of gas?
• Many people are undoubtedly filtering things through a partisan lens; a YouGov poll finds that a person’s evaluation of gas prices is more closely related to whether they approve of the Iran war than to price changes in their state. Academics have gone back and forth on whether the information in gas prices is already reflected in other macroeconomic indicators, and whether a voter’s perception of gas prices is more important than the reality. But recent evidence suggests some interesting conclusions.
• First, the relationship between gas prices and approval may not be linear; it could matter most beyond a certain threshold or after a certain percent increase. Rapid spikes in prices could leave a stronger impression on people’s minds than the raw numbers would suggest. One survey of over a million transcripts from six major TV news outlets finds that coverage ramps up sharply when the nominal price of gas crests $3.50 per gallon. One paper finds that gas prices are at least as important as many other traditional indicators, and that their effects cannot be explained away by controlling for them. Second, evidence suggests that actual pocketbook concerns are motivating political consequences, not mere perceptions. One study found that individuals with longer average driving times to work are indeed more likely to hold the president accountable for gas price increases. Another found that while gas prices and media coverage of them are positively correlated, the volume of news about them, by itself, is not a predictor of approval after controlling for prices. Additionally, the two variables did not interact meaningfully in predicting approval, indicating that the impact of gas prices on approval is not dependent on the volume of associated media coverage.
• What sets the present case apart from other economic shocks is that this one is easily and directly attributable to the president based on the decision to take military action against Iran. Yes, that does mean he benefits from the lower floor polarization that grants him. But it also means that 63 percent of Americans directly blame him for the high prices. Energy, oil, and gas prices are now tied as Americans’ second-most-cited financial problem: more so than they were in 2022 or any time since 2008. For good or for bad, voters’ thoughts on the issue seem destined to be irrevocably tied to the president.

The Best Offense is a Good NDAA

The Annual Defense Policy Bill. The National Defense Authorization Act (NDAA) authorizes Department of Defense activities each fiscal year.

• While the NDAA authorizes spending and doesn’t directly appropriate it, defense spending bills often track with the toplines in the NDAA. House Armed Services Committee Chair Mike Rogers (R-AL) told Politico that he plans to align the House FY27 NDAA with President Trump’s proposed $1.15 trillion defense discretionary spending budget, a substantial increase over the $838.7 billion bipartisan defense spending deal enacted for FY26. This suggests that Republicans are likely to build the $150 billion in defense spending from the One Big Beautiful Bill Act into the baseline going into FY27. This could help defense hawks in negotiations over defense spending.
• Trump has sought to leave his imprint on defense through his proposed Golden Dome missile defense system and Trump-class battleships. High cost estimates for these priorities could become major issues in the debate over the FY27 NDAA. The Congressional Budget Office has estimated that his Golden Dome missile defense system would cost $1.2 trillion. The Navy plans to order 15 of President Trump’s requested ships, the first one clocking in at $17.5 billion.
• While House Republicans may align their NDAA with Trump’s budget request, that doesn’t mean that Congress will actually enact that spending level for FY27. Democrats are expected to retake control of the House in the midterm elections and are likely to seek a return to parity in defense and nondefense spending increases.
• Congressional Quarterly reported late last week that the House Armed Services Committee plans to hold a markup of the annual defense policy bill the week of June 8th and does not plan to hold subcommittee markups of elements of the NDAA. Skipping those markups could speed up the process but leave individual lawmakers with less opportunity to influence the final bill. A House markup in June tees up the chamber to pass its version of the NDAA this summer. The House will then have to reconcile differences with the Senate. A final compromise NDAA is likely to pass in the lame duck session after Election Day ahead of the informal year-end deadline.

A 64-Year-Old Tradition. Congress has passed an NDAA every year since 1961 and has kept the streak going even amid greater political polarization.

• As one of the few truly must-pass bills on Capitol Hill, the NDAA is an attractive vehicle for other legislation to be attached as amendments for an easier path to passing Congress. It’s been compared to a Christmas tree due to all of the legislative “ornaments” that can be attached.
• While the NDAA is meant to authorize Pentagon programs, it can ultimately serve as a vehicle for lawmakers’ priorities that have a clear nexus to defense, such as AI, drones, or biotech, or are less related to the underlying subject of the bill.
• Legislation that supporters may seek to attach to the NDAA this year could include federal quantum reauthorization, an AI legislative framework, or export controls on chips (though White House opposition could block the latter).
• The political environment of an election year and the length of congressional recesses this year narrow the available windows for passing bills. This dynamic makes the NDAA even more significant as a legislative vehicle.

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