By Jarrett Renshaw, Jacob Bogage and Steve Holland
LAS VEGAS, April 16 (Reuters) - U.S. President Donald Trump will look to brush off concerns about the economy and the sagging political prospects of his Republican Party during a campaign-style swing through the battleground states of Nevada and Arizona this week, as the war with Iran pushes gasoline prices higher.
Trump is set to use a Thursday stop in Las Vegas to tout his tax and immigration bill that includes campaign promises tailored to court
hourly and hospitality workers.
But spiking prices nationwide -- from gas to groceries, housing to insurance -- have shaken the U.S. economy and with it Trump's clout to drive support to fellow conservatives in November's midterm elections. Five Republican strategists told Reuters they fear the White House has lost control of the affordability debate, neutralizing the political tailwind from the tax bill and the resilient economy that has powered past much of Trump's trade war and previous military interventions.
“The cost of living is going to trump anything — no pun intended — over any small change in tax returns,” said David Damore, a political science professor at the University of Nevada, Las Vegas.
Some of Trump's political advisers have a rosier outlook, predicting the president will soon clinch a deal with Iran to reopen the vital Strait of Hormuz and that the corresponding economic anxiety will cool in the months before the midterms.
White House spokesman Kush Desai said Trump has always been clear about the short-term economic impact of the Iran war and the tax benefits he helped deliver "reflect how the Administration hasn’t lost focus on delivering on our affordability agenda at home."
It could take weeks for global oil producers to restart production after hostilities cease around the waterway, however, and higher fuel prices mean sticky inflation on all manner of consumer goods and services.
That presents pronounced risks for Republicans, who face an increasingly hostile reelection map in the House of Representatives and Senate.
TRICKY MIDTERM MAP
Democrats are the overwhelming favorite for taking the majority from Republicans in the House, while key Senate races in North Carolina, Georgia, Ohio and even deeply conservative Nebraska are sliding toward Democrats, according to the Cook Political Report with Amy Walter, a leading election prognosticator. Trump's approval rating in a late-March Reuters/Ipsos poll fell to 36%, marking a low point in his second term.
Nevada and Arizona also have competitive Senate and House races. On Friday, Trump is expected to participate in an event hosted by conservative group Turning Point USA in Phoenix.
Republican lawmakers had hoped provisions in the One Big Beautiful Bill Act - Trump and Republicans' $4.1 trillion agenda enacted last year, including no taxes on tips or overtime wages - would resonate with voters seeking economic relief.
"I think that’s been wiped out," said one of the Republican strategists, who is consulting on congressional races. The strategists spoke anonymously to discuss sensitive matters.
The challenge for Republicans has been compounded in recent weeks by Trump's focus on the conflict in Iran, as well as his public dispute with Pope Leo and criticism over his social media post of an image depicting himself in religious imagery resembling Jesus Christ.
The White House is dispatching senior adviser James Blair to work with midterm campaigns, Trump said last week, in a sign of growing concern about the party’s prospects.
WEST COAST SWING
Trump will host a roundtable on Thursday focused on his elimination of federal taxes on tips, a policy aimed at service workers in a city where hospitality jobs dominate the economy. Supporters say it will boost take-home pay for restaurant, hotel and casino workers who rely heavily on gratuities.
The “no tax on tips” provision in Trump’s 2025 tax law allows eligible workers to deduct up to $25,000 in tip income from federal taxes, though payroll taxes still apply and the benefit phases out for higher earners. About 4 million Americans work in tipped jobs, with analysts estimating average benefits of roughly $1,400 annually for those who qualify.
More than 53 million tax filers claimed at least one of Trump’s signature tax cuts this filing season, White House spokeswoman Karoline Leavitt said on Wednesday. The average tax refund exceeded $3,400, she said.
Gas prices remain a vulnerability. Trump has offered mixed messages on how long higher fuel costs will last, at times suggesting Americans may have to endure prolonged pain because of global supply disruptions, while at other times saying prices will fall sharply once the war ends.
The administration has few options to lower energy prices beyond a complex diplomatic effort tied to the Strait of Hormuz, according to people familiar with discussions inside and around the White House.
Officials have released oil from the Strategic Petroleum Reserve, adjusted shipping rules and eased sanctions on Russian and Iranian oil. But prices remain elevated, with global benchmarks over $90 a barrel.
“All that is left are bad options, and we have urged the White House not to pursue them,” one oil executive involved in discussions said.
Trump has sought to temper expectations by portraying midterm losses as customary for the party in power, while insisting his administration can reverse that trend.
"Even when you have a great president, they tend to lose the midterms," he told Fox Business Network's "Mornings with Maria" program on Wednesday. "So we're going to try turning it around."
"We have to explain to the voters, so importantly, the great job that we've done, because there's no reason why the Republicans should be losing."
(Reporting By Jarrett Renshaw, Jacob Bogage and Steve Holland; additional reporting by Humeyra Pamuk; Editing by Colleen Jenkins, Rod Nickel)
