President Trump’s second administration at the one-year mark

• A central feature of the president’s trade approach has been the aggressive use of tariffs. In fact, the average US tariff rate surged from roughly 2.4% at the end of 2024 to about 16.8% by November 2025. Highlights of the administration’s strategy include:
  • Reciprocal trade policy: country-specific tariffs ranging from 10%-50%
  • Sectoral tariffs: tariffs on specific sectors due to supply chain and related national security concerns
    • In effect: autos, steel, aluminum, copper, heavy trucks, kitchen cabinets, lumber, upholstered furniture
    • Under consideration: semiconductor chips, medical equipment, critical minerals, drones, robotics, aircraft, pharmaceuticals, motion pictures, others 
  • Other tariffs: Brazil, Canada, China, India and Mexico all face tariffs to address other US concerns such as geopolitics and drug trafficking. 
• Framework trade deals: 
  • The US is implementing or negotiating several framework trade deals that address tariff rates, nontariff barriers, investments in the US and market access.
• Industrial policy:
  • The US federal government is entering into a range of public-private partnerships in several sectors viewed as important to national security, including by:
    • Acquiring golden shares
    • Taking equity positions in private enterprises
    • Establishing revenue-sharing arrangements
    • Concluding deals with pharmaceutical companies to lower certain drug prices

Uncertainty surrounding US trade policy will be punctuated by several pending policy milestones:

• US Supreme Court ruling: decision expected in Q1 on the legality of tariffs imposed by Trump under the International Emergency Economic Powers Act (IEEPA). These powers were used to impose tariffs under Trump’s reciprocal trade policy as well as on goods from Brazil, Canada, China, India and Mexico. 
• 2026 review of USMCA: Significant negotiations are expected as part of the mandatory 2026 review of the US-Mexico-Canada Agreement, the most economically significant trade agreement for the US. 
• 2026 midterm elections: Political considerations, along with economic indicators, could prompt changes or a moderation of Trump’s trade agenda.

Focus on reducing regulatory burdens

• Key directives from the president to executive agencies include:
  • Rescinding regulations and guidance that are not clearly authorized by statute, whose costs outweigh their benefits or that pose significant burdens on small businesses.
  • Overturning “unlawful” regulations without going through the normal rulemaking process. Trump has referred to unlawful regulations as those that exceed an agency’s legal authority or violate constitutional limits. 
  • Reviewing existing regulations for anticompetitive effects and recommending changes or rescissions.

Alignment of agency agendas

• An EO expanded White House oversight of federal agency rulemaking agendas to ensure they align with administration priorities.

Efforts to reshape the size and composition of government

• At the start of his second term, the president launched a temporary agency called the Department of Government Efficiency (DOGE), tasked with identifying opportunities to modernize federal government technology systems, examine federal contracts and spending, and reshape the federal government workforce. 
  • To date, the administration’s various efforts have resulted in a roughly 13% reduction of the federal workforce.
• Trump also has removed many Democrats from government boards and commissions, in several cases leaving Republican appointees alone to advance his priorities. Some moves have prompted lawsuits, including Trump v. Slaughter, a case challenging the president’s removal of a Federal Trade Commission (FTC) commissioner in 2025. Late last year, the Supreme Court heard oral arguments in the case.

• This year will feature active rulemaking across agencies to implement a range of the administration’s priorities, including those promoting energy production, technology, digital assets, capital formation and AI development and adoption. Actions also will include additional moves to roll back rules implemented during the previous administration, such as those related to sustainability, labor and financial regulation.
• The Supreme Court is expected to rule on the Trump v. Slaughter case by the end of its term in June 2026. If the case is overturned, the decision could reshape protections for leaders at independent agencies, including the Securities and Exchange Commission (SEC) and FTC.
• Additionally, courts at all levels likely will have another busy year with new and ongoing litigation.

• Trump outlined his vision for AI policy with a January 2025 executive order to “enhance America’s global AI dominance in order to promote human flourishing, economic competitiveness and national security.” 
• The cornerstone of the administration’s AI policy came with the July release of Winning the Race: America’s AI Action Plan.” The plan identified dozens of federal policy actions across three pillars: 
  • Accelerate AI innovation
  • Build American AI infrastructure
  • Lead in international AI diplomacy and security
• Last fall, Trump launched the Genesis Mission, an initiative aimed at modernizing federal government services. This includes efforts to revamp federal IT systems, improve user experience and reduce inefficiencies.
  • The initiative also will focus on the development of an integrated AI platform to harness federal scientific datasets. The administration intends to work through US Department of Energy laboratories as well as to seek large-scale investments from the private sector in areas such as supercomputers, data resources, advanced AI and quantum systems and scientific instruments to support these efforts. 
• The administration is also taking steps to address the growing demand for energy sources to power AI data centers and other innovative technologies. This includes exploring the co-location of energy sources to handle capacity needs and efforts to fast-track construction of energy generation facilities and data centers by reducing regulatory burdens.
• In an effort to address the vacuum created by a lack of federal AI legislation, Trump in December issued an EO on “Eliminating State Law Obstruction of National Artificial Intelligence Policy.” 
  • While an EO alone cannot preempt state laws, the order leans on the Department of Justice to challenge state AI laws in the courts and calls on federal agencies to condition grant funds on the status of a state’s AI laws. A lawsuit challenging the constitutionality of the EO is likely. The president also has called on his administration to draft the framework for federal AI legislation, although it will ultimately be up to Congress.

• The Department of Commerce is expected to launch an American AI Export Program to promote the export of the “American AI Technology Stack” via technical, financial and diplomatic resources.
• Federal regulation of AI will continue to be debated as states react to the president’s EO challenging their laws. 
• Energy usage by technology companies will remain a point of federal-local government contention as capacity is stretched.

• Trump’s “Strengthening American Leadership in Digital Financial Technology” EO outlined priorities to “promote United States leadership in digital assets and financial technology while protecting economic liberty.”
• This was bolstered by a follow-up executive order that established a Strategic Bitcoin Reserve and a US Digital Asset Stockpile.
• More specifics emerged via a July 2025 report from the President’s Working Group on Digital Asset Markets which provided a roadmap for the administration’s policy agenda on crypto, and the federal banking agencies have taken several actions to enable digital asset activities by banking organizations.
• The Trump SEC has also been active in this space. Key actions from the Commission include:
  • Repeal of Staff Accounting Bulletin (SAB) 121. Long criticized by industry, SAB 121 required custodians of digital assets to list them as liabilities on their balance sheets.
  • Guidance redefining and narrowing what are deemed securities. This included determining that not all crypto assets are automatically securities, including certain protocol mining activities. Other guidance also clarified disclosure requirements for offerings and registrations of securities in the crypto asset markets.
  • Announcement of plans to issue an innovation exemption to provide temporary relief for crypto companies to bring new products and services to market.
  • A shift in approach to cryptocurrency enforcement and dismissal of pending actions against several major cryptocurrency market entities.

• Federal agencies will continue to work on the rulemakings to implement the GENIUS Act and other elements of the president’s digital assets promotion agenda. The GENIUS Act is set to take effect in the coming year.
• Discussion on the taxation of digital assets transactions, which represent billions in potential federal revenue, will loom over Congress and the Trump administration as negotiations continue.
• The House-passed CLARITY Act will be a top priority for Senate Republican leadership in 2026. 
  • The legislation provides a regulatory structure for non-stablecoin categories of digital assets but has stalled in the Senate due to policy disagreements and competing priorities.

• The OBBBA extended or made permanent certain expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and established a new international tax framework while also fulfilling a large swath of the administration’s first-year domestic agenda. 
• Notable provisions included:
  • Providing tax relief permanency for the TCJA extensions, including the state and local tax deduction (SALT) cap 
  • New tax relief measures such as no tax on tips, overtime and car loan interest, as well as savings accounts for children
  • Permanency of TCJA precliffs on bonus depreciation, Section 163(j) interest deductibility and Section 174 R&D expensing – as well as increased amounts for the standard deduction and Child Tax Credit
  • Maintaining the Section 199A pass-through deduction at 20%
  • International provisions that set the base erosion and anti-abuse tax (BEAT) rate at 10.5% and global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) rates both at 14%
  • Ending “Green New Deal” spending, promoting “America-First Energy and Other Reforms,” detailing energy tax credit modifications
  • Enhancing deduction and income tax credit guardrails, and other reforms, including for Employee Retention Credit provisions and Social Security number requirements for education credits 
  • Health tax, including eligibility requirements, waste/fraud provisions and health savings account changes

• Tax-related measures that potentially could advance if attached to future must-pass legislation include:
  • Work Opportunity Tax Credit that expired at the end of 2025 
  • Seven-year recovery period for motor sports entertainment complexes that expired at the end of 2025
  • Section 181 expensing rules for film, television and theater productions that expired at the end of 2025 – US-Taiwan tax relief
  • Deduction limit of 90% of gambling losses that takes effect in 2026 (restore 100% deduction)
  • Retirement provisions
• Pending their satisfaction with the outcome of Pillar 2 of the Organisation for Economic Co-operation and Development (OECD)-led global tax deal, Republicans could seek to revive the Section 899 retaliatory tax provision. This measure was included in the House version of the OBBBA but dropped following a G7 statement welcoming an international agreement on a side-by-side system that would exempt US multinationals from most Pillar 2 global minimum tax rules. That agreement was announced on January 5.

• Trump signed wide-ranging executive orders aimed at eliminating DEI-related requirements, mandates, programs and preferencing throughout the federal government and federal contractors. Other DEI-related orders impacted the armed forces, higher education, science and AI.
• The president also has prioritized efforts to address illegal immigration and reduce migration flows into the US. While early actions have generally targeted illegal and other broader immigration policies, more recently the administration also has undertaken executive actions and rulemakings specifically impacting the high-skilled employment-based immigration. 
  • Such actions have included the September 19 proclamation imposing a $100,000 payment on certain H-1B petitions, a new final rule establishing a “weighted” selection process for H-1Bs, a proposal to require a fixed period of admission for certain students and early career foreign professionals and increased scrutiny and enforcement related to H-1B employers by the Department of Labor, and expanded “online presence reviews” for H-1B applicants and their dependents.

• The administration’s “America First” labor efforts will continue to impact talent access, availability and mobility across sectors, industries and geographies.
• Continued efforts to roll back Biden-era DEI policies and ongoing legal challenges to these actions will continue to drive uncertainty.
• Increased scrutiny of foreign workers will persist; access to and use of foreign talent will be more costly, complex and uncertain. Additional rulemakings will impact the H-1B program as a whole, Optional Practical Training for foreign students and potentially H-4 work authorization. 
  • While the September 19 H-1B proclamation is currently in effect – bolstered by a federal judge ruling – legal challenges will continue to play out in the courts.
• The administration will continue to seek opportunities to “reshore” jobs and promote US-based manufacturing and production via various tax and other incentives as well as trade barriers. 
• The year ahead will likely also bring increased focus on the impact of AI on the workforce, including calls for businesses to upskill, retrain and educate workers for AI-integrated and AI-based roles. 

• The “Unleashing American Energy” EO directed federal agencies to use emergency authorities to expand domestic energy supply.
• Trump also mandated deregulatory efforts through sunset provisions, delayed implementation, and identifying state laws and policies extending beyond their authority.
• Provisions of the OBBBA accelerated the phase-out of subsidies for new certain clean energy facilities while tightening eligibility further bolstering Trump’s energy agenda.
• The president’s Genesis Mission includes energy policy components, including the advancement of nuclear technologies.
• Many of Trump’s trade deals have included investment commitments including for oil, gas and nuclear energy infrastructure and significant energy purchase commitments from trading partners.

• The administration will focus on enacting large-scale permitting reform to accelerate electric grid modernization projects, development of new energy production facilities and improvements to overall energy infrastructure.
• Energy will be a flashpoint in the renegotiation of USMCA in 2026. The US Trade Representative has already objected to the reforms to the Mexican energy sector that took place after the USMCA was signed and its effects on US energy production.
• Following the removal of Venezuelan leader Nicolas Maduro earlier this year, efforts to accelerate investment in the country’s oil infrastructure will remain a priority for the Trump administration.