2026 Global policy outlook
Global Overview
President Trump, in the first year of his second term, has pushed forward the most aggressive and maximalist executive agenda in recent history. Working alongside a majority Republican Congress, he has been relentless in advancing Republican objectives. The volume of executive orders, 212 to date, has allowed Trump to quickly implement his agenda across the government, challenge institutional norms, and ensure his long-held belief that trade deficits are evidence of countries “ripping off” the US as the foundation to his global bilateral trade deal pursuits.
President Trump’s trade policies over the past year have had a significant impact on nations worldwide, affecting economic growth, disrupting supply chains, and creating market uncertainty. While many bilateral agreements have been constructed, White House officials acknowledge that the long-term structural economic shifts (like the reshoring of critical sectors and the revitalization of US manufacturing, will take time to unfold, and yet it’s not clear they have the political capital for such a timeline.
The American reaction has been mixed and mostly split along partisan lines, with broader concerns continuing to be rooted in high prices and economic uncertainty. The most concrete confirmation of this was illustrated in the recent November election results. While 2025 is an off year for federal elections, several important state-wide executive and legislative races (as well as a few key mayoral races) demonstrated the current electoral weaknesses of the Republican party and the ability of Democrats to show their strength after a crushing defeat in the 2024 general elections.
Elections are gut checks, and America rivals the world in election frequency. This particular gut check came in the middle of the longest federal government shutdown in US history and a subsequent drop in the President’s approval rating, making it clear that until Americans feel economic relief in their everyday lives, the incumbency in Washington will suffer at the ballot box. As soon as the government reopened, key cabinet members and top White House officials made a notable messaging pivot to issues related to affordability.
An aggressive trade policy coupled with a significant amount of international presidential travel consumed much of the year, but it also gave rise to more traditional Republican policies, like deregulation and extending and expanding tax cuts. We move into 2026 anticipating Washington’s agenda being much more focused on tariff adjustments and policies targeting affordability and home ownership. Alleviating price pressure and increasing wage growth will be the aim of the next reconciliation package that is already being bandied about amongst Congressional Republican leadership and key players in the administration.
Time is short, as January will bring the start of the Congressional primary season and the President’s State of the Union address. With mid-term elections on the horizon, Congress will need to act quickly on a reconciliation package, and the Trump administration will need to push forward on their affordability agenda should Republicans have any chance of influencing the economic issues most pressing to voters prior to November.
Global view
United Kingdom: One of the UK government’s key objectives in the second half will be successfully concluding ‘reset’ negotiations with the European Union to reduce frictions in goods trade and build linkages between UK and EU energy policies.
European Union: The European Commission faces a crowded political and policy agenda that will converge around negotiations on the EU budget for 2028-2034. Strengthening the EU’s competitiveness will remain a top priority. One year after the publication of the Draghi Report, progress has been slow, and member states are urging the Commission to accelerate efforts on simplification and growth-oriented measures. At the same time, EU unity will continue to be tested across a range of other issues, including security and defence, sanctions on Russia, trade tensions with the US and China, climate policy, enlargement, and migration.
China: Beijing used its 20-23 October plenum to set its priorities for the 15th Five-Year Plan: upgrading “new-quality productive forces,” accelerating self-reliance in strategic technology, and modernizing its industrial base to buffer against external shocks. Boosting domestic consumption is a priority although details remain unclear, with potential “consumption targets” being introduced in the next Plan. These may be useful for trade partners looking at overall capacity in the economy but potentially less effective than more direct measures to lift household confidence. The plenum also highlighted China’s commitment to the green transition remaining a priority, along with military modernization. The 15th Five-Year Plan will be adopted and finalized in March 2026.
Investment risks
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations), and investors may not get back the full amount invested. Past performance is not a guide to future returns.
