Wolfe Research Outlines Key DC Policy Risks for Investors in H2 2026

The second half of 2026 is unlikely to see sweeping policy changes, but investors should monitor a series of legislative, trade, and regulatory developments that could create risks and opportunities across multiple sectors, according to a recent note from Wolfe Research.

Legislative Focus Narrows Ahead of Midterms

With Congress shifting into campaign mode for the Nov. 3 midterm elections, the window for passing major legislation is closing, the brokerage stated. However, several key deadlines and potential actions remain on the calendar that could influence market sentiment.

Policymakers face an Oct. 1 deadline to fund the government and avert a shutdown. Wolfe Research also highlighted other potential legislative items, including:

• A possible defense supplemental spending bill
• Crypto market structure legislation
• China-related provisions within the annual defense authorization bill

Shifting Trade Landscape

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On trade, Wolfe expects the Trump administration to continue reshaping its tariff regime following a Supreme Court ruling against the use of IEEPA tariffs. The analysis suggests that Section 301 tariffs will likely replace the previous framework.

The note warned that several industries remain at risk of new Section 232 tariffs later this year, including medical technology, robotics, drones, polysilicon, and wind turbines. Separately, negotiations over the USMCA trade pact are expected to continue into late 2026 or early 2027, likely resulting in an updated trilateral agreement with new bilateral arrangements.

Regulatory and Geopolitical Watchlist

Several significant regulatory proposals are expected to be finalized late this year or in early 2027. Wolfe highlighted pending reforms to bank capital and liquidity requirements, SEC reporting rules, energy regulations, and healthcare reimbursement policies.

Beyond domestic policy, the firm identified several geopolitical milestones for investors to watch, including the Aug. 17 deadline for U.S.-Iran negotiations, a potential Trump-Xi meeting in September, Israel's October elections, and Taiwan's local elections in November. The note cautioned that under the current administration, investors should also be prepared for unexpected policy actions.