2026 Global Policy Outlook

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, 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 bi-lateral 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. White House officials acknowledge long-term structural economic shifts (like the reshoring of critical sectors, and the revitalization of US manufacturing) will take time to unfold. 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. Broader concerns continue to be rooted in high prices and economic uncertainty, as illustrated in the recent November election results. While 2025 was 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 Republicans and the Democrats’ ability to show their strength after a crushing defeat in the 2024 general elections.

Elections are gut checks. 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, the incumbency in Washington will suffer at the ballot box. 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 midterm elections on the horizon, Congress and the Trump administration will need to act quickly on their affordability agenda should Republicans have any chance of influencing the economic issues most pressing to voters prior to November.

Other issues to watch

• This year, the Trump administration acquired direct ownership stakes in five major publicly traded companies. These investments mark a new era of government involvement in key industries to secure domestic supply chains for semiconductors, critical minerals, pharmaceuticals, steel, and national defense. Historically, those investments come about during major economic crises to prevent a systemic collapse.
• Currently being challenged before the Supreme Court, Learning Resources v. Trump will decide the fate of the president’s tariffs, and, in an ironic twist, the major questions doctrine¹ could be a decisive factor. This key conservative pillar has been utilized in recent SCOTUS decisions to undo perceived liberal executive and agency actions. The Supreme Court decision on this case is expected in the first half of next year.
• Over the summer, the Federal Reserve (the Fed) began developing a new risk-based capital rule, aka “Basel III Endgame,” that would ease the capital requirements on the largest US banks from the Biden administration’s version of the rule. Vice Chair for Supervision Michelle Bowman is leading development efforts. Financial regulators are expected to remove the original proposal and unveil a new one in the first quarter of 2026.

Global view

United Kingdom

A key UK government objective will be successfully concluding ‘reset’ negotiations with the European Union to reduce frictions in trade and build linkages between UK and EU energy policies. In 2026, we expect continued political volatility, fragmentation, and voter realignment in a new era of five-party politics (Conservatives, Labour, Lib Dems, Greens, and Reform). The political centerpiece will be May elections. More than 4,000 local council seats in England, 10 mayoralties plus all the Welsh Senedd and the Scottish Parliament seats are up for grabs. For the US relationship, the UK will seek to build on the momentum achieved in 2025. However, pressure from the US government on tech, online safety rules, and digital services tax will likely continue. 2026 is also set to be an important year for pension reform, but the most significant reforms will require legislation.

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 defense, 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.

Read the full 2026 Global Policy Outlook:

Our team covers each region’s political contests, fiscal initiatives, and regulations, and examines how these issues may or may not change the financial landscape.