In 2026, the policy environment is expected to be less disruptive but still intense as President Trump enters the second year of his second term. Strategist Tobin Marcus of Wolfe Research anticipates constrained policymaking and growing tension between economic stimulus and political risk. The administration has already implemented key policies, including tariffs, tax cuts, and a sweeping reconciliation bill, setting the stage for a more challenging midterm election year.

Despite significant policy actions already in place, Trump faces limited opportunities for new policymaking, needing to address a midterm electorate that appears sour. Marcus identifies stimulus as a key concern, noting temporary impacts from tax cuts and uncertainty around tariffs. The Supreme Court ruling on IEEPA tariffs and ongoing trade investigations will keep trade policy central to political discussions.

Affordability remains a political vulnerability, with the administration focusing on housing as a potential area for executive action. The likelihood of another reconciliation bill is low due to internal Republican divisions and deficit concerns. Bipartisan outcomes in 2026 are seen as narrow, with crypto market structure legislation and ACA subsidy cliff addressing being the most plausible bipartisan wins.

The fiscal situation remains dire, with deficits expected to stay around 6% of GDP and deteriorating debt dynamics. The U.S.-China relationship is expected to maintain stability through 2026, thanks to the October truce, although structural tensions persist. Midterm elections will also determine Trump's room for maneuver and the potential for renewed policy disruption.