Tariff Backlash Ahead of US Midterm Elections and Discussion of Trump's Third Term: Directions for South Korea's Trade and Diplomatic Strategy

Executive Summary

The Trump administration's tariff policy, initially facing legal challenges, has structurally solidified by shifting its legal basis to Section 301 following the Supreme Court's ruling invalidating reciprocal tariffs. Paradoxically, the costs are borne almost entirely by US households and businesses, creating a significant political backlash ahead of the midterm elections. The baseline scenario (50-55% probability) involves the prolonged imposition of tariffs and a return to divided government with Democrats regaining control of the House. In this case, executive order-based tariff policies are likely to continue without congressional restraint, prolonging uncertainty in the trade environment. While the discussion of a third Trump term faces constitutional hurdles and is unlikely to materialize, it amplifies uncertainty regarding the US constitutional order and further erodes allies' trust in the US and policy predictability. The South Korean government and businesses must move beyond mitigating short-term shocks and pursue a three-pronged strategy of deepening on-site investment in the US, strengthening multilateral trade alliances, and scenario planning for constitutional uncertainty, thereby adapting structurally to the permanent changes in the US trade environment.

I. Analysis of the Issue Situation

US Domestic Politics: Tariff Backlash and Discussion of Trump's Third Term Emerge Ahead of Midterm Elections

Issue Situation Analysis

1. Background and Course of the Issue

The Trump administration's tariff policy has been incrementally expanded since the beginning of its first term in 2025, with the intention of fundamentally reshaping the US trade order. The protectionist impulse, latent since the first term, began to take institutional form with the commencement of the second term. President Trump declared "Liberation Day" in April 2025, abruptly introducing a broad system of reciprocal tariffs. However, this measure subsequently faced a legal setback when the US Supreme Court ruled it invalid. Consequently, the administration shifted to a new method of imposing tariffs using the existing legal basis of Section 301 of the Trade Act of 1974, signifying a substantial change that reshapes the very legal foundation of US trade policy, rather than a mere tactical adjustment.

This trend is structurally similar to the pattern observed during the first administration in 2018. At that time, President Trump "pressured Asian and European allies over defense cost-sharing in line with 'America First,' disregarded multilateral consultative bodies, and continuously sought transactions that would allow for the constant exercise of US sovereignty." In the second administration, these tendencies are being reproduced in a more systematized and legally sophisticated form. Notably, the imposition of a 50% tariff on Canada has escalated existing trade disputes to a new phase, extending beyond mere negotiation leverage to inflict substantial economic shocks on US consumers and industries as a whole.

2. Current Situation

The current US political landscape is characterized by a complex interplay of three variables simultaneously at play ahead of the November midterm elections: the economic repercussions of tariff policy, the opposition's counterattack, and the discussion surrounding a third Trump term.

Realization of Tariff Backlash

Both Canadian and US opinion polls indicate that a majority of respondents express dissatisfaction with the current trade war. According to a Canadian Angus Reid poll, 28% of respondents supported limited retaliatory tariffs, and 34% supported reciprocal tariffs equivalent to those imposed by the US. This suggests that a hardline stance against the US is gradually becoming mainstream within Canada. In the US, an analysis by the Peterson Institute for International Economics (PIIE) indicates that the costs of the 50% tariff on Canadian imports are borne almost entirely by US household and business consumers, not foreign exporters, with significant price increases expected for specific items such as dairy products and beverages. This structure means that the burden of the tariffs falls on domestic consumers.

President Trump actively defended his tariff policy during a rally near Detroit, Michigan, emphasizing its positive effects on General Motors (GM). However, Michigan is a swing state closely connected to the automotive industry and Canadian supply chains, and the negative impacts of tariffs are already becoming visible throughout the regional economy. Experts predict that the tariff policy is likely to continue despite public opposition, as the fiscal revenue and negotiation leverage generated by tariffs offer incentives that future administrations will find difficult to abandon. Josh Lipsky, Deputy Director of the Atlantic Council, noted that Trump is committed to rebuilding tariff barriers even after the midterm elections, and that capital market instability, rather than legal challenges, will be a more realistic barrier to tariff repeal.

Rise of the Progressive Left within the Democratic Party and Political Pressure

Meanwhile, within the opposition Democratic Party, the progressive left wing, led by Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez (AOC), is gaining significant political momentum. The two rallied hundreds of supporters at the historic Fox Theatre in Detroit, Michigan, to support Abdul El-Sayed, a Senate candidate advocating for Medicare for All. Their rally targeted voters dissatisfied with Trump's economic policies, particularly the working class in the Rust Belt region, and symbolically represented the growing influence of the progressive wing within the Democratic Party ahead of the midterm elections.

Emergence of Discussion on a Third Trump Term

Around his 80th birthday, President Trump jokingly mentioned the possibility of a third term at a White House Correspondents' Association dinner, but the remark quickly escalated into a substantive constitutional and political debate. While legally impossible due to the explicit prohibition of a third term in the 22nd Amendment of the US Constitution, some of Trump's supporters have begun to seriously discuss this possibility. This discussion is interpreted not merely as political rhetoric but as a challenge to American democratic norms, acting as a variable that simultaneously stimulates cohesion within the Republican Party and opposition from the Democratic Party during the midterm election cycle.

3. Key Actors and Their Positions/Interests

The Trump Administration

The Trump administration views its tariff policy not merely as a trade tool but as a strategic instrument to simultaneously achieve multiple objectives: reviving US manufacturing, rectifying trade deficits, and securing leverage in foreign negotiations. The shift to Section 301 as the legal basis after the Supreme Court's ruling invalidating reciprocal tariffs demonstrates the administration's active efforts to address legal vulnerabilities and ensure the continuity of its tariff policy. President Trump is actively promoting the achievements of his tariff policy in key swing states like Michigan ahead of the midterm elections to rally his base, but price increases in the real economy are creating cracks in this narrative.

Republican Congress

While the Republican Congress outwardly maintains a supportive stance on Trump's tariff policy, concerns about its negative impact on the economies of their respective districts are growing internally. In particular, representatives from agricultural and manufacturing districts are in a delicate state of tension with the administration regarding the rising costs of imported raw materials due to tariffs and export losses caused by retaliatory tariffs. For these members, whose top priority is defending their seats in the midterm elections, the tariff backlash is perceived as a potential electoral risk.

Progressive Democrats (Sanders & AOC)

The progressive wing of the Democratic Party, represented by Sanders and AOC, is employing a strategy of linking the price increases and economic inequality caused by Trump's tariff policy to their own political agenda. By prominently advocating for agendas distinct from the mainstream Democratic Party, such as Medicare for All, immigration policy reform, and a reassessment of policy towards Israel, they are expanding their influence within the party during the midterm election cycle. The rise of this faction intensifies the structural dilemma faced by the Democratic Party, which is forced to make a strategic choice between a moderate line targeting the center and a left-wing line mobilizing its base.

US Consumers and Industries

US consumers and industries are the direct victims of the tariff policy. As confirmed by PIIE's analysis, the costs of tariffs are borne by domestic purchasers rather than foreign exporters, further eroding household real purchasing power amidst already high inflationary pressures. In particular, companies in sectors such as automobiles, food, and energy, which have closely integrated supply chains with Canada, face a dual pressure of rising costs and supply chain instability.

Canadian Government and Public Opinion

While the Canadian government, under Prime Minister Mark Carney, seeks a negotiated resolution to the US tariff offensive, domestic public opinion is increasingly shifting away from optimistic expectations of a settlement. Angus Reid polls show a decline in confidence that Prime Minister Carney will achieve a favorable negotiation outcome, suggesting that the Canadian government is facing pressure for a tougher response domestically as well.

4. Summary of Key Issues

The key issues in the current situation can be summarized into four main points.

First, the sustainability of tariff policy and the midterm election variableis at issue. While tariffs are likely to persist due to the tangible incentives of fiscal revenue and negotiation leverage, despite public opposition, voter dissatisfaction stemming from price increases could negatively impact the Republican Party in the midterm elections. The crucial factor will be whether the Trump administration can successfully demonstrate the effectiveness of its tariff policy before the election.

Second, the legal durability of the Section 301-based tariff systemis a key variable determining the medium- to long-term direction of US trade policy. It remains to be seen whether the new legal basis adopted by the administration after the Supreme Court's ruling invalidating reciprocal tariffs can withstand future judicial challenges and how broadly this system can be applied.

Third, the conflict between progressive and moderate factions within the Democratic Party and their midterm election strategyis at issue. Whether the rise of the Sanders-AOC faction will strengthen the Democratic Party's competitiveness in the midterms or lead to the alienation of moderate voters is a critical variable that will shape the future of the US political landscape. Identifying candidates and messages that can appeal to "white working-class voters in the Rust Belt region" is emerging as a key challenge for the Democratic Party.

Fourth, the debate over American democratic norms triggered by the discussion of a third Trump termis at issue. The emergence of discussions about a third term, which is constitutionally impossible, as a political discourse reflects a norm-challenging tendency among Trump's supporters while simultaneously stimulating the discourse of defending democracy among the opposition and civil society. This discussion is expected to act as a double-edged sword, strengthening cohesion within the Republican Party during the midterm election cycle while providing a rallying point for the anti-Trump camp.

II. In-depth Analysis of the Issue

US Domestic Politics: Tariff Backlash and Discussion of Trump's Third Term Emerge Ahead of Midterm Elections

In-depth Issue Analysis: Analysis of Fundamental Causes, Structural Context, and Historical Precedents

1. Analysis of the Fundamental Causes of the Issue

The fundamental reason why the Trump administration's tariff policy is turning into a political backlash ahead of the midterm elections stems not from a simple policy failure, but from a structural disconnect between economic reality and political narrative. President Trump has consistently presented tariffs as a key means to revive US manufacturing and correct trade imbalances. However, as the analysis by the Peterson Institute for International Economics clearly shows, the costs of tariffs ultimately fall almost entirely on US household and business consumers, not foreign exporters. This signifies an unbridgeable gap between the administration's official narrative that "tariffs are paid by foreign countries" and the reality experienced by US consumers.

Beneath this disconnect lies the structural problem of deindustrialization in the US, which has been ongoing for decades. The Trump administration attributes the cause of this problem to unfair trade practices and the free-riding of allies, seeking to use tariffs as an immediate corrective measure. However, in a reality where global supply chains are highly integrated, tariffs paradoxically weaken the competitiveness of US companies by increasing the costs of raw materials and intermediate goods, rather than protecting domestic industries. The automotive industry in Michigan serves as a prime example, where the negative impacts of tariffs are already becoming visible in a region closely connected with Canada through parts supply chains. Although President Trump defended tariffs during his Michigan rally by emphasizing their positive effects on General Motors (GM), this is largely a political maneuver to downplay the damage to the overall regional economy by highlighting the short-term benefits for specific large corporations.

Furthermore, the inherent instability of the legal foundation for tariff policy acts as a fundamental vulnerability. Following the Supreme Court's ruling invalidating the reciprocal tariffs of "Liberation Day" in 2025, the administration shifted the legal basis to Section 301 of the Trade Act of 1974. This transition not only demonstrates the administration's firm commitment to tariff policy but also reveals that the policy rests on a precarious structure dependent on executive orders, lacking legislative backing from Congress. Ultimately, the fundamental causes of the tariff backlash can be attributed to a combination of economic errors in policy design, instability in legal legitimacy, and the disconnect between political narrative and economic reality.

2. Structural Context

Political Structure

To understand the political structure of Trump's tariff policy, attention must be paid to the geographical characteristics of US electoral politics. The Trump administration has consistently targeted the white working class in the Rust Belt as its core support base, and tariffs have served as a means to deliver a powerful political message to this demographic: the protection of manufacturing jobs and retaliation against unfair foreign trade [11]. However, this strategy is revealing serious cracks in the context of the midterm elections. This is because the paradox arises where rising prices due to tariffs directly squeeze the cost of living for these very Rust Belt voters [4].

The political landscape of the opposition Democratic Party also acts as a significant variable in this context. The progressive left wing, represented by Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez, is mobilizing supporters, gathering hundreds in Detroit, Michigan, around agendas such as Medicare for All [10]. The rise in their approval ratings is a direct pressure on the Trump administration, while also demonstrating the deepening ideological conflict within the Democratic Party between moderates and the progressive left. The historical precedent of the Democratic Party regaining the House of Representatives in the 2018 midterm elections, creating a divided government [2], provides an important reference point for the current political landscape.

The emergence of discussions about a third Trump term adds another layer of instability to this political context. Although President Trump jokingly mentioned a third term at the White House Correspondents' Dinner at the age of 80 [14], the fact that this remark is evolving into a substantive political discussion can be interpreted as a challenge to the American constitutional order. The 22nd Amendment to the US Constitution explicitly prohibits a third presidential term, and this discussion amplifies concerns about authoritarian tendencies within the Trump base while simultaneously triggering internal tensions within the Republican Party regarding the post-Trump succession.

Economic Structure

From an economic structure perspective, the current backlash against tariffs should be understood not as a problem of short-term policy effects, but as a manifestation of the structural vulnerabilities of the US economy. The US trade deficit has reached an all-time high of $1.2 trillion as of 2024 [13], and the Trump administration has designated this as an unsustainable emergency, attempting a comprehensive correction through tariffs. However, the trade deficit is not merely a product of unfair trade practices but stems from a complex structure involving low US savings rates, the dollar's reserve currency status, and the US position within global supply chains. The prevailing view in economics is that tariffs alone cannot alter this structure; rather, they exacerbate inflation, making the Federal Reserve's monetary policy operations more difficult [4].

A particularly noteworthy point is that once tariff policy is implemented, it acquires a structural inertia that makes it difficult to retract. Because the fiscal revenue and negotiation leverage generated by tariffs function as attractive policy tools for future administrations, tariff policy is likely to persist in the long term despite public opposition [4][7]. Josh Lipsky, Deputy Director of the Atlantic Council, analyzed that the biggest constraint on Trump's tariff policy would not be legal challenges, but concerns in the bond market about the fiscal shock that would occur if tariff revenues disappeared [7]. This suggests that tariff policy has complex economic implications intertwined with the US fiscal structure, extending beyond mere trade instruments.

Security Structure

From a security structure perspective, the US review of its troop presence in Europe, coupled with disputes with UNESCO and the UN Human Rights Council, is intensifying domestic debate over the overall US foreign strategy, intertwined with the tariff issue. Since its first term, the Trump administration has "pressured allies in Asia and Europe over defense cost-sharing, ignored multilateral consultative bodies, and consistently sought transactions that would allow for the constant exercise of US sovereignty" [2]. In its second term, this tendency has intensified, evolving into a complex pressure strategy where trade pressure and security reviews proceed simultaneously. The Trump administration's simultaneous pursuit of a review of European troop deployments and tariff offensives, amidst the prolonged military conflict with Iran [16], is interpreted as an intention to fundamentally reshape alliance relationships.

3. Comparison with Historical Precedents and Similar Cases

The most directly comparable historical precedent to the current situation is the midterm election period of the Trump administration's first term in 2018. At that time, President Trump "ordered the withdrawal from the TPP, refused to join the Paris Climate Accord," and simultaneously "initiated a full-scale trade war with China, viewing the US trade deficit with China as cumulative and China's Made in China 2025 as a threat to US security" [2]. As a result, the Democratic Party regained the House of Representatives in the November 2018 midterm elections, establishing a divided government, and the analysis that "visible legislative achievements for the Trump administration would be unlikely for at least the next two years" [2] became a reality. The current midterm election period of the second administration carries the possibility of this pattern repeating, but there are also significant differences. Based on the experience of its first term, the second administration has strengthened the legal durability of its policies, such as converting the legal basis for tariffs to Section 301 [8][9], creating a structure where policies are difficult to overturn solely based on election results.

In a broader historical context, the combination of protectionism and electoral politics is a recurring pattern in US political history. The Smoot-Hawley Tariff Act of 1930, the peak of protectionism during the Great Depression, is recorded as a historical failure that triggered retaliatory tariffs from trading partners, leading to a sharp contraction in world trade. The current 50% tariff on Canada [3] and the 10-12.5% tariffs on 60 trading partners [9] are considered the most aggressive protectionist measures since Smoot-Hawley in terms of scale and scope. However, unlike the Smoot-Hawley era, the current global supply chains are far more complexly integrated, leading to wider and more unpredictable ripple effects from tariffs.

Regarding the discussion of a third Trump term, the case of President Franklin D. Roosevelt's four terms is cited as a historical precedent. In reaction to Roosevelt's long tenure, the 22nd Amendment was introduced in 1951, limiting presidential terms to two. Trump's discussion of a third term can be interpreted as an attempt to circumvent or alter this constitutional constraint, carrying implications beyond mere political rhetoric as it challenges the foundation of American democratic institutions [14].

4. Key Variables in Issue Development

The key variables determining the future development of the current issue can be broadly summarized into four categories.

First, the trend of inflation indicatorsis crucial. The extent to which consumer price increases due to tariffs become visible before the midterm elections will directly impact the Republican Party's seat count. In particular, if price increases concentrated in imported Canadian goods such as alcohol and dairy products [3] are felt by ordinary voters as a burden on their cost of living, the defection of Republican support in swing states could accelerate.

Second, the Democratic Party's ability to unify its factionsis important. For the rise in support for the progressive left wing, represented by Sanders and Ocasio-Cortez [10], to translate into enhanced electoral competitiveness for the entire Democratic Party, unity with the moderate wing is essential. However, core progressive agendas such as Medicare for All, immigration policy, and cessation of aid to Israel could be burdensome for moderate voters, making it impossible to rule out the possibility that internal ideological conflicts within the Democratic Party could create a situation favorable to the Republican Party [10][11].

Third, the legal durability of tariff policyis a key factor. Whether the new tariff system, which the administration has converted to Section 301 [9], can withstand further legal challenges will determine the policy's sustainability. If the courts invalidate this new tariff system as well, the administration will be forced to pursue tariff legislation through Congress, a task that is virtually impossible in a divided government situation.

Fourth, the institutionalization of the third Trump term discussionis significant. If the discussion of a third term, currently confined to the level of jokes, is elevated to an official agenda within the Republican Party, it becomes a variable that fundamentally shakes the dynamics of the 2026 midterm elections and the 2028 presidential election. In particular, the reactions of potential post-Trump candidates within the Republican Party and the legal interpretations of constitutional scholars will be important indicators determining the direction of this discussion.