What 2026 has in store: Fragile growth and trade uncertainty

After a year of uncertainty—marked by fluctuating tariff rates and shifting U.S. trade policies—the outlook for 2026 offers little promise of stability. Even before new events emerge to disrupt the global economic and political landscape, several key issues warrant attention.

The roller coaster of tariff announcements in 2025 has hardened into a structural challenge for the global economy. U.S. tariffs, now averaging above 10%—up from just 2% at the start of 2025—are reshaping global trade flows.

Further changes are likely in 2026. A pending U.S. Supreme Court decision could alter how the administration implements and adjusts tariff rates, introducing fresh uncertainty. Meanwhile, Canada, the U.S. and Mexico have launched processes to review the Canada-United States-Mexico Agreement (CUSMA) in July. As the review approaches, negotiations and political pressures will intensify, creating volatility as businesses and markets attempt to anticipate outcomes.

According to EDC’s Global Economic Outlook, the world economy is entering its weakest three-year stretch in nearly three decades. After modest 3% growth in 2025, global expansion is forecast at just 3.1% this year and 3.2% in 2027—levels not seen since the aftermath of the 2009 financial crisis. Economies most exposed to U.S. trade will bear the brunt of these shifts.

United States: New Federal Reserve chair and midterm elections loom

Two dates stand out on the U.S. political calendar in 2026:

• June 1: A new Federal Reserve chair begins their term, giving President Donald Trump’s administration an opportunity to influence monetary policy. While decisions rest with the Federal Open Market Committee, the chair plays a pivotal role in shaping outcomes. With the administration favouring further rate cuts, markets will watch closely for signals on interest rates and confidence.
• Nov. 3: Midterm elections could reshape Congress and determine how much of the president’s agenda moves forward—or gets rolled back.

Global elections: Political flashpoints ahead

While 2026 isn’t a “year of the ballot box” like 2024, several consequential elections are on the horizon. In South America, Colombia’s presidential vote (May 31) and Brazil’s national and presidential elections (Oct. 4) could shift policy directions amid deep political divisions. Hungary heads to the polls April 12 and Israel faces elections by Oct. 27—both with potential global implications.

Commodity markets will see contrasting dynamics in 2026:

• Oil: Weak global demand collides with rising supply as OPEC+ loosens cuts and production grows in the U.S., Canada and Guyana. Even with tighter sanctions on Russian oil, a supply glut is expected, pushing prices lower.
• Copper: A September 2025 mudslide at Indonesia’s Grasberg Mine—responsible for nearly 3% of global output—has halted production. With electrification driving demand for electric vehicles (EVs) and data centres, the market faces a deficit, keeping copper prices elevated.
• Gold: After a historic run up in value in 2025, we expect that gold prices will continue to hold near record highs as investors and central banks look to hedge their exposure to economic and policy uncertainty. 

Bottom line: Moving forward through uncertainty

2026 will be defined by fragile growth, persistent trade uncertainty and political flashpoints. Businesses and policy-makers must prepare for and push through volatility and adapt strategies to navigate a world where stability remains elusive.

Explore EDC’s Global Economic Outlook and Country Risk Quarterly for strategies to manage risk and navigate global trade uncertainty.