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Tariffs, Taxes and AI Power Plans Dominate Outlook After the State of the Union

The recent State of the Union, though lengthy, offered few new policy announcements but highlighted three pillars—tariffs, health‑care subsidies, and a power‑infrastructure push for AI firms—that will shape market expectations. Both UBS’s Marc Anderson and Veda Partners’ Henrietta Treyz agreed that President Trump is doubling down on tariffs, insisting they will stay despite overwhelming public opposition. However, the Supreme Court’s recent ruling makes clear that any attempt to replace the federal income tax with foreign‑paid tariffs would require congressional approval, which appears unlikely. Growth projections remain modest at 2.5‑3% for 2026, keeping equity markets stable but not dramatically altered. Treyz noted that the expiration of ACA subsidies stripped consumers of $200‑$1,000 annually, fueling affordability concerns that benefit Democratic candidates. Anderson pointed to the AI‑driven surge in electricity demand—currently 4% of global consumption, projected to hit 8% by 2035—as a catalyst for utility sector upside, especially if AI firms build their own power plants as the President suggested. For investors, the message is clear: monitor policy‑driven volatility in tariffs and health‑care while positioning for a “power and resources” theme, with utilities and related commodities poised to gain from rising AI energy needs and potential regulatory support.