Trump's foreign policy may hit economic credibility

The US president wields enormous power and Donald Trump has greatly expanded his executive authority over the past year. But there is one area where he is learning the limits of presidential power — his ability to quickly lower the cost of living.

As a candidate, Trump promised bold economic fixes to tackle voters' biggest concern — high inflation. But, in office, Trump has discovered what his predecessors learned: taming prices is much harder than rhetoric suggests. Inflation is immune to the power of the presidential bully pulpit and cannot be ⁠cowed into submission through threats. With just 10 months until pivotal congressional elections, Trump faces growing discontent over his handling of the economy and voter anger over persistent high prices could potentially shatter Republicans' tenuous grip over Congress.

Some 36% of Americans approve of Trump's overall handling of the economy, according to a Reuters/Ipsos poll conducted on Monday and Tuesday. That is well below his initial 42% rating on the issue when he first took office last year, but up from a low of 33% in a December poll. In recent days, the White House has scrambled to offer Americans a slew of populist economic proposals to ease cost-of-living concerns. Trump has proposed a cap on credit card interest rates at 10%, a ban on large investors buying up family housing and a directive to government-controlled mortgage giants Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds to lower mortgage interest rates.

While Trump continues to talk up his economic achievements, economists and political strategists told Reuters the flurry of proposals signals the White House understands this is a moment of political peril. Nevertheless, the proposals are unlikely to have a significant impact on cost of living between now and November's congressional elections and some could even backfire, the strategists and economists warned.

"No president can wave a wand and change the economy overnight," said Charlie Gerow, a Republican strategist. "Inflation is not coming down anywhere near as fast as President Trump or the rest of America hoped." A key impediment for Trump and his advisers, the strategists and economists say, is the sheer size of the US economy — a $30 trillion behemoth where presidential ambitions to reduce prices are often no match for market forces or the decisions of hundreds of millions of consumers and businesses.

When Trump does try to show he is focused on lowering prices, political strategists say he often undercuts that effort by simultaneously claiming the economy is strong and the issue of affordability is a Democratic hoax. "Growth is exploding, productivity is soaring, investment is booming, incomes are rising," Trump told the Detroit Economic Club on Tuesday. "Inflation is defeated." Despite Trump's claims, consumer prices rose last month, driven by higher food and rent costs, and job growth has been sluggish.

Kush Desai, a White House spokesman, echoed repeated comments by Trump that he inherited high inflation from the previous administration of Democratic President Joe Biden. When Trump took office in January 2025 the US inflation rate was 3%. Data released on Tuesday showed that the consumer price index rose 2.7% in the year to December, a small improvement during 2025 but still showing persistent inflation. "Americans know full well who's getting us out of Joe Biden's mess," Desai said.

Half a dozen economists and lenders who spoke to Reuters expressed skepticism that Trump's recent economic proposals will have any meaningful impact on the cost of living. They said banks will likely stop offering credit to lower-income voters if there is an interest rate cap. "The intention might be to help the working class, but the reality is it's going to cut off their access to credit entirely," said William Stern, CEO of Cardiff, a San Diego-based small business and equipment financing lender.

A ban on Wall Street firms buying single-family homes would only have a modest effect on reducing house prices since most investors are small-scale buyers, not large institutions, economists said.

"A decline in investor demand could also slow new construction. Rents could rise," said Thom Malone, principal economist at property data provider Cotality.

The economists and strategists said the recent economic proposals also lack clarity.

"They show some concern to address affordability issues that many people are feeling," said Loretta Mester, former president of the Federal Reserve Bank of Cleveland and now an adjunct professor of finance at the University of Pennsylvania's Wharton School. "But they do not seem to have a coherence."

Trump has recently devoted considerable attention to foreign policy rather than economic concerns. The U.S. overthrow and detention of Venezuelan President Nicolas Maduro and Trump's threats to take military action against Iran and Cuba risk hindering efforts to convince voters he is laser-focused on the economy, the political strategists said.

Trump's fixation on Venezuela is also frustrating some White House aides and Republican lawmakers, who want him to address economic and healthcare concerns, according to three people familiar with the matter. "Donald Trump is nothing if not undisciplined," said Jason Cabel Roe, a Republican consultant who has been critical of Trump in the past. "Voters always vote based on their pocketbooks. While he's having some success on the international stage, the domestic economic situation is politically far more perilous."