By Robert Whelan
Over the past year, US economic policy has taken a sharp turn. The Trump administration seems determined to put ‘America First’ above all else, stepping back from the globalised, alliance-driven approach that shaped the post-Cold War era. It’s debatable whether this direction is right or wrong, both economically and morally, but, for now, investors should be aware of how it impacts portfolios.
Simply put, America First means deploying trade policy, fiscal spending, regulation and industrial support to prioritise US domestic growth and employment over global integration or care for long-standing alliances.
White House policy is now designed to strengthen areas deemed critical to security, competitiveness and AI technological leadership.
This reality became very apparent in April 2025 with Executive Order 14257, known as ‘Liberation Day’. The order introduced a system of reciprocal tariffs, imposed on trading partners. Trade policy was reframed as a tool to be used for negotiation and leverage, and a far cry from the consensus global trade framework.
Investors should be aware that this is not political rhetoric. It is a reordering of incentives that reshapes where capital flows, which sectors are favoured and how markets are likely to react in 2026.
What changed in 2025
It’s quite possible that upcoming legal challenges from US Supreme Court shoot down some of these tariffs, but their market impact has already been felt, and I imagine the administration will try to circumvent any rulings to continue to apply pressure.
Energy policy equally became an important pillar of this approach. The administration formally withdrew from the Paris Climate Accord for a second time and issued an Energy Emergency Declaration, fast-tracking permits for oil, gas, nuclear power and small modular reactors. Federal leasing for large-scale offshore wind projects was curtailed. Going forward, energy production will be viewed as a source of economic strength, with less care for the quality of the fuels consumed.
There is a high correlation historically between wealth of nations and nations with large energy production and consumption. Investors should be aware these policies should continue to keep energy costs low, especially for US manufacturing, infrastructure and data-centre expansion. Oil and gas are at their lowest prices since early 2022.
Additionally, the administration aggressively promoted the reshoring of strategically important industries. AI infrastructure, semiconductors, defence production and critical minerals were promoted from commercial businesses to matters of national security. Unsurprisingly, these sectors delivered strong investment performance during the year as a result. The United States intends to reduce reliance on foreign and, in some cases, adversarial (China) supply chains in areas deemed vital to economic and geopolitical importance.
The US views China’s government as already heavily involved in promoting key industries. This year, the US showed a greater willingness to intervene directly in markets to support these goals. Subsidies and procurement commitments were replaced with direct equity investments in strategically important firms.
Intel was supported as a cornerstone of domestic semiconductor leadership. MP Materials received backing to secure US access to rare earth processing. Lithium Americas was positioned as part of a domestic battery and electric-vehicle supply chain. These targeted investments were designed to anchor critical industries onshore.
Internationally, we could also see this playing out. China continued to face US scrutiny over trade imbalances, intellectual property failings and technological competition. The relationship remained tense but pragmatic, with the reduction in reliance and the multi-polar world becoming more a reality. Europe encountered a more transactional United States, with trade negotiations and energy deals getting less of the ‘Art of the Deal’ treatment, despite the long-term ally status.
Trump 2026: Doubling down on national priorities
As we look to 2026, I see little evidence that this policy direction will soften. And it appears the administration is prepared to intensify the agenda it set in 2025. National interest is expected to remain the central theme of economic policy, with security considerations playing a larger role in decisions around trade, technology and industrial support.
AI remains the heart of the strategy. Initiatives such as the Genesis Mission, which seeks to unlock federal data for private-sector AI development, reflect this effort. The US fought the space race with Russia. We are in the early stages of the AI race with China. Export bans on advanced semiconductor manufacturing equipment to China continue to be in place and highlight this anxiety over Chinese progress in frontier chip technology.
Domestically, the preference for running the economy hot is likely to persist, with fiscal support such as the ‘One Big Beautiful Bill’ aimed at boosting consumer spending, domestic investment and employment. We are also seeing renewed emphasis on the Western Hemisphere, especially the Americas, a repeat of the Monroe Doctrine. There is a push to secure supply chains closer to home through nearshoring, though that might make the global economy less efficient.
How should investors position themselves?
From an investment perspective, these policies create both opportunity and risk. Artificial intelligence remains a central engine of growth. Roughly half of GDP growth in 2025 was linked to AI and data-centre activity, its role is likely to remain prominent in 2026. While many AI-related companies now trade at elevated valuations, the opportunities extend beyond the headline names.
Investors should be selective, focusing on businesses where capital expenditure is translating into quantifiable returns. Investors should also look at second- and third-order beneficiaries that can harness AI and automation to improve productivity and margins. For example, we could expect Amazon to obtain major margin improvement by replacing warehouse workers with warehouse robots.
Reshoring investments are likely to benefit many industries outside the highlighted names, e.g., infrastructure, energy, financial, construction, etc. Apple has committed to a US$600 billion expansion of investment in the US, including domestic server manufacturing. Nvidia has pledged US$500 billion toward US-based AI supercomputer production, bringing advanced manufacturing back onshore for the first time at scale. In semiconductors, TSMC’s Arizona expansion and First Solar’s vertically integrated facility in Louisiana highlight how entire ecosystems, not just individual factories, are being rebuilt domestically.
When considering global allocations, the contrasts are stark. China remains economically important and tactically tradable. However, structural constraints, such as capital controls, heavy state intervention and unresolved property and banking risks, limit its suitability as a long-term core holding.
Europe offers stability but limited vigour. It is constrained by weak productivity growth, fiscal pressures and a bureaucratic strangulation. The UK and Canada are developed and institutionally strong, but increasingly peripheral in a world shaped by scale, technology and strategic investment.
As a result, US-focused equities are likely to remain the anchor of global portfolios. They benefit from state-backed energy, state-backed technology and state-backed supply chains as a means to maintain global leadership over China. Capital allocation is increasingly aligned with national strategy. In such an environment, understanding political policy priorities is central to investing successfully in 2026 and beyond.
Robert Whelan, a chartered accountant, is the portfolio manager at NCB Capital Markets (Cayman) Ltd.