The Trump Administration’s tariff policies have unquestionably had an impact on the global economy, as well as on the operations and financial performance of at least some individual companies. However, the overall impact has turned out to be less than economists and other observers feared at the time of President Trump’s “liberation day” announcement earlier this year. As discussed below, a number of factors have contributed to the tariffs’ muted impact. However, there are reasons to be concerned that the full effect of the tariffs is yet to kick in so far but may be felt in 2026, with potential consquences for D&O insurance underwriters.

As discussed in a November 30, 2025, Wall Street Journal article (here), when the tariffs were originally announced in April, economists were concerned that the tariffs would cause the U.S. to buy less from the rest of the world, cutting exports and jobs. More recently, however, economists have been revising their 2025 global economic outlooks upward. The biggest reason? What the U.S. took away with the tariffs, the U.S. tech industry has given back with a huge artificial intelligence (AI) spending spree.

By way of illustration, both the World Trade Organization and the International Monetary Fund have raised their 2025 global growth forecasts, partly as the result of the fortune that tech companies are investing in AI this year. Four companies alone – Amazon, Google, Meta, and Microsoft – are putting about $400 billion in 2025 alone into AI-related capital expenditures. Other countries – including China, Korea, and Taiwan – are also spending heavily on tech infrastructure.

While the AI investments are helping to mute the impact of the tariffs, there are still problems. For starters, the tech investment is concentrated in a few regions. The Journal article quotes an industry observer as saying that the benefits from the huge investment in AI is “concentrated in advanced manufacturing economies.”

Moreover, as the Journal article also points out, the tariff pains “haven’t been canceled. They have just been deferred.” Companies had ample advance warning from Trump’s campaign rhetoric and other public comments that the tariffs were coming. Importers rushed to ship goods to the U.S. before the announced tariffs took effect. The Journal article quotes a Bank of Singapore economist as saying that “It’s too early to say that the tariffs have had less impact than feared,” adding that “What’s happening is that the impact has just been delayed.”

The front-loaded inventory stockpiles are now dwindling, and economists expect that companies will begin to pass the tariff costs on to consumers and to export less to the U.S. The economists’ 2026 forecasts increasingly reflect diminished expectations for 2026, based on an anticipated downturn in global trade volume. A 2026 downturn is, however, far from certain. A variety of government moves around the world could still diminish the impact from the tariffs.

Just the same, it is worth thinking about what 2026 global impact from the tariffs might mean. Even though the impact from the tariffs has so far been less than originally feared, it is not as if the tariffs have had no impact. Just to cite at least one indicator, a number of U.S. companies that declared bankruptcy this year cited the impact of the tariffs as one factor for their insolvency:

Were the postponed full impact of the tariffs to weigh on businesses in 2026, it could result in increased numbers of bankruptcies, particularly among companies already experiencing financial strains and laboring under debt.

In thinking about the possible consequences if the tariffs were to fully kick in during 2026, it is also worth considering that, even though the tariff impact has so far been muted, there have already been tariff-related securities class action lawsuit filings.

For example, as discussed here, in late August 2025, a plaintiff shareholder filed a securities lawsuit against industrial materials company Dow, Inc., alleging that the company misrepresented the impact that the tariffs would have on the firm. Similarly, in November 2025, a plaintiff shareholder filed a securities class action lawsuit against used auto retailer CarMax, alleging that the company tried to portray the quarterly sales surge that preceded the tariffs’ impact as being due to longer-term company advantages rather than tariff-motivated consumer behavior, as discussed here.

The upshot is that if in fact the delayed impact of the tariffs finally kicks in in 2026, it potentially could lead to increased numbers of bankruptcy filings and increased numbers of tariff-related securities suits.

There could be D&O insurance underwriting implications to all of this. Along those lines, it is worth thinking about which industries are likely to be impacted the most if there were to be a tariff-fueled economic downturn in 2026.

Certain industries seem particularly vulnerable; for example, small retailers (especially in apparel, shoes, and furniture, and other businesses thar rely heavily on imports); manufacturing businesses that rely heavily on imported raw materials, and other businesses that are susceptible to supply chain disruption; automotive and auto parts suppliers (who are dependent on imports from Mexico and Canada); agricultural businesses, which are vulnerable both to increased costs for fertilizer and other supplies and to a downturn in exports as tariffed countries turn away from U.S. goods;

All of these tariff impacts could be magnified due to possible impacts from AI-related developments. AI investment has so far managed to lift the global economy and sustain the stock market as well. Eventually, however, investors are going to expect a return on their AI investments. So far, returns have been sparse. The Economist magazine reports that total AI-related revenues amount to only $50 billion a year – roughly one-eighth of Apple’s or Alphabet’s annual revenues. Eventually, investors will want to see more. Could 2026 be the year that investor expectations catch up with AI’s investment promise?

A loss of confidence in the AI boom could both rock the stock market and whack companies that have made the hefty AI investments. To be sure, it could also be the case that in 2026 the transformative effect expected from AI could begin to impact the global economy in positive ways. It is not inevitable that there will be some sort of AI crash. But if there were to be an AI crash, it could magnify the possible future economic complications from the tariffs.

Adding to all of this is the range of uncertainties that other circumstances may contribute to the economic outlook. There is, for example, the pending Supreme Court case considering the constitutionality of the Trump reciprocal tariffs. There is looming uncertainty at the Fed, as Chair Jerome Powell’s term is set to expire in May 2026. There is also the looming November 2026 mid-term Congressional election. The pending wars in the Ukraine and in Gaza, and the undeclared drug “war” in the Caribbean add an extra and ominous layer of uncertainty, along with the continued trade tensions with China. Indeed, the watchword for the global political and economic environment has to be “uncertainty.”