| The real economic test will show as 2026 progresses – tariff impacts should become more visible | As the world drifts towards ‘coalitions of the willing,’ partnerships on defence, climate and trade will likely emerge | Many firms remain committed to climate targets, though some may downplay their messaging to avoid political scrutiny |
The US – Trump, midterms and a 250th Anniversary!
2026 will be defined by the unpredictable influence of President Trump. The real economic test will show as 2026 progresses – tariff impacts should become more visible, placing pressure on consumers, supply chains and global growth. A pivotal moment arrives in May, when Jerome Powell steps down – Trump’s pick for the next Federal Reserve Chair will signal whether the central bank’s independence holds or erodes. On 3 November 2026, all 435 House seats and 35 Senate seats are contested in mid-term elections. With Republicans holding a slim House majority, Democrats view this as their chance to reassert influence. And America’s 250th anniversary will no doubt amplify political spectacle and national introspection.
Global geopolitics – a new order emerging
As the world continues to drift towards ‘coalitions of the willing,’ partnerships on defence, climate and trade will likely emerge. Although China enters 2026 with its own economic headwinds – deflation, slowing growth and excess industrial capacity – ‘America First’ creates opportunities for Beijing to extend its influence – as Trump ostracises nations – other alliances forge. One challenge will be keeping US-China relations transactional rather than confrontational.
Europe faces an increasingly difficult balancing act – strengthening defence, maintaining US ties, reviving growth and managing deficits simultaneously.
Conflict hot spots remain fragile: hopes for a lasting peace in Gaza, a continuing war in Ukraine, turmoil in Sudan and Myanmar, and persistent ‘grey-zone’ pressure from Russia and China in Northern Europe and the South China Sea.
AI – booming investment, slow adoption
American tech giants spent over $400bn on AI data centres and infrastructure in 2025, but revenues total around $50bn. Despite 800 million global ChatGPT users, formal business adoption is still modest, with only around 10% of large firms having embedded AI. The focus for 2026 is speeding up adoption; crucial given AI-linked companies now make up 44% of S&P 500 market cap.
Climate and clean tech momentum
Global emissions likely peaked in 2025, with clean-tech investment expanding across the Global South. Many firms remain committed to climate targets, though some may downplay their messaging to avoid political scrutiny in Washington.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. It is important to take professional advice before making any decision relating to your personal finances. This document does not provide individual tailored investment advice and is for guidance only.
All details are believed to be correct at time of writing – 05 December 2025.
