What’s happened?

Donald Trump easily won the Iowa caucuses held on January 15th, the first primary race for the Republican presidential nomination, with 51% of the vote, versus 21% for Ron DeSantis and 19% for Nikki Haley. This resounding victory supports our view that Mr Trump will win the Republican nomination, but several wildcard factors remain.

Why does it matter?

Although Mr Trump’s Iowa victory was widely expected, it offers three important insights. First, it confirms that Mr Trump’s popularity has broken the mould for US political candidates. Mr Trump held on to his 30-point polling lead, which is a major victory in a state where primary margins tend to be narrow. Previously, the widest margin of victory for a Republican candidate in a competitive Iowa contest was 12.8% (Bob Dole in 1988). In Iowa, voters typically also reward presidential candidates for direct, in-person campaigning. Although his campaign was active, Mr Trump himself made few appearances prior to the caucuses, instead making national-level appearances in court (Mr Trump faces a total of 91 felony charges; he denies all wrongdoing).  

Second, it is worth noting that Iowa’s first-in-the-nation status can inflate its importance in picking the winner. Of the seven competitive GOP races since 1980, on only two occasions has the Iowa winner won the Republican nomination (Mr Dole in 1996 and George W Bush in 2000). In the year that Mr Dole won the Iowa caucus by the previous record margin, he lost the nomination.

Third, the outcome fits with our view that Ms Haley is more likely to emerge as the main challenger to Mr Trump in the coming weeks. Mr DeSantis defied polling to win second place, but he needed to do better than his 21% tally to maintain his standing past Super Tuesday (March 5th). He had invested heavily in Iowa and maintained a direct personal presence, and the state is home to a large number of evangelical voters, who had been a focus of Mr DeSantis’s campaign efforts. This is therefore an underwhelming outcome, and the upcoming primaries will only get harder for him. We expect him to fall to third place on January 23rd in New Hampshire (where more moderate Republicans tend to favour Ms Haley) and on February 24th in South Carolina (Ms Haley’s home state).

What next?

The Iowa outturn supports our view that Mr Trump will win the Republican nomination, although Ms Haley is likely to draw away moderate Republican and independent votes. The big question is what will happen to those votes if and when Ms Haley drops out. For now, we believe they are likely to be split between Mr Trump and the Democratic incumbent, Joe Biden.

The analysis and forecasts featured in this piece can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify prospective opportunities and potential risks.