Headline-Driven Uncertainty: How Geopolitics, Tariffs, and Affordability are Restraining U.S. Growth  

Executive Summary 

We believe the administration’s recent actions highlight three key priorities: geopolitical signaling, trade policy and tariffs, and domestic affordability measures. While each initiative aims to address distinct challenges, together they create uncertainty for corporate planning and growth. Our view: these headlines are not just market noise; they shape Board-level decisions, delay investment, and introduce structural headwinds for sectors directly in the government’s crosshairs. We believe this uncertainty is restraining U.S. economic growth and negatively impacting the labor market.

Geopolitical Strategy: Beyond Venezuela

By Patrick McGeever

Late last week 17 oil executives met with the Trump administration to discuss their plans in Venezuela. While the administration is hoping to secure $100 billion in commitments to rebuild Venezuela’s oil infrastructure, we are highly skeptical that will take place in the foreseeable future. We believe energy companies will require political stability and constitutional changes in Venezuela, security guarantees from the U.S. and much higher oil prices to risk stakeholder capital in the region.  Political stability and constitutional changes are likely years off, while security guarantees from the U.S. would need to be durable beyond this administration’s term. Moreover, it is estimated that Venezuelan crude oil would be priced at a $10 discount to West Canada Select oil (or about $35 per barrel), well below the estimated $50 breakeven price.  

Unfortunately for this administration, there are other challenges, too. There are unpaid arbitration awards to Conoco ($7.7 billion) for the seizure of its Petrozuata, Hamaca and Corocoro projects by Hugo Chavez in 2007. ExxonMobil also has unpaid awards ($1.6 billion) for the seizure of its Cerro Negro and La Ceiba projects at that time. Furthermore, Chinese oil companies have claims of more than $10 billion worth of Venezuelan crude in their loan-for-oil deals. Given these significant obstacles, to even devote capital to the region, we believe incremental supply from Venezuela, which is currently producing below 1 million barrels per day, will be very modest in the near term and likely to take years to reach a level that would put negative pressure on crude oil prices.  

Most importantly, moves in Venezuela were not solely about oil, but a strategic demonstration of U.S. willingness to use force and assert influence in the Western Hemisphere. This intervention signals to more powerful regimes such as China, Russia and Iran that Washington is prepared to act decisively to protect its interests and counter rival influence globally. The intervention signals global resolve but leaves energy and emerging-market growth plans unchanged, given the high level of uncertainty.  

Tariffs and Trade Policy

By Leah Savageau, CFA

Trade policy remains a central lever for the administration, and the Supreme Court’s pending case on IEEPA-based tariffs continues to cloud the outlook for the current tariff regime. With no ruling issued in January, JPMorgan expects the probability of a June ruling to rise sharply, reflecting Supreme Court scheduling norms and historical precedent. 

While we do not expect a Supreme Court ruling to materially alter the trajectory of U.S. trade policy, given the administration’s ability to rely on alternative authorities such as Sections 122 and 301, it is likely to trigger near-term adjustments to the tariff regime. A decision would give the administration cover to recalibrate tariffs in areas under focus from an affordability standpoint. At the same time, uncertainty around refund mechanics complicates the timing and magnitude of tariff-related revenues. Together, these dynamics extend structural headwinds for corporate planning. Moreover, any shortfall in tariff receipts would need to be financed through higher Treasury issuance, raising the risk of upward pressure on yields and increasing companies’ cost of capital. 

Affordability Measures

By Kyle Crawford, Chris Priebe & Mohammed Ahmed

There has been a flurry of announcements at the start of the year targeting areas that consumers view as financially challenging, the housing market and elevated borrowing costs.  

First, the proposed 10% cap on credit card interest rates for one year via executive order (the outcome we view as most likely to implement this change) could significantly disrupt the consumer finance landscape; a permanent cap would upend the credit card business model, leading to tighter underwriting (reduced credit), reduced rewards, and migration to less-regulated alternatives. It not only has implications for banks and credit card companies but the ABS market as well, possibly triggering events experienced in 2009. The unintended consequences are material and would more than offset the savings from lower credit card rates. Therefore, while we could see companies voluntarily launch cards with promotional rates to appease the administration, we do not expect secular change.

Second, the $200 billion MBS buyback program aims to lower mortgage rates, funded by GSEs rather than through the Federal Reserve as in prior, much large QE programs. While this approach provides a marginal affordability boost, it also carries risks, including upward pressure on home prices and potential complications for GSE reform. We view this as the most likely affordability-focused action to be implemented, and we expect purchases to expand beyond the initial $200 billion and/or additional efforts to narrow the primary-secondary spread.

Finally, the ban on institutional investment in single-family homes, intended to improve affordability, could disrupt housing capital flows, REIT strategies, and market liquidity.  

We believe these measures are more likely to introduce uncertainty for consumer finance and housing sectors, restraining growth and strategic planning. Beyond the macro view, these headlines highlight risks for investors as well. As we disclosed in our 2026 Outlook, we believe security selection will once again drive performance in 2026, with the Finance sector a good example. 

Conclusion 

Across all three areas, geopolitical signaling, tariffs, and affordability, the common thread is headline-driven uncertainty. These initiatives may deliver short-term political wins, but they create long-term complexity for corporate strategy. When Boards face unpredictable regulatory and geopolitical shifts, growth plans stall. Even if economic impacts are modest, the uncertainty they generate is a powerful brake on expansion. While we see potential green shoots in forward indicators (e.g., the Dodge Construction Index, which reflects non-residential construction plans), concurrent indicators reflect hesitancy (e.g., the NFIB Capital Spending Plans, which reflect small business investment plans, and the University of Michigan Consumer Sentiment, which reflects consumer sentiment).