Federal Policy Shifts and State Regulatory Activity Shape Industry Landscape

State of the Union

In a record-length State of the Union (nearly two hours, the longest in recent history), President Trump reviewed his accomplishments from the past year and outlined his policy priorities for the remainder of 2026. The President touted his victories on issues such as reducing illegal immigration at the southern border, lowering taxes, and successful foreign policy negotiations and military actions. He reiterated his intent to continue deportations, urged Congress to pass a voter ID law, and named Vice President J.D. Vance to lead the effort in the “war on fraud.”
 

While not as cantankerous as last year’s address to the Joint Session of Congress, several Democrats boycotted the event, while others shouted in response when the President called out Democratic legislators on a variety of issues. The President accused Democrats and his predecessor of increasing costs that he has had to address in his first year, citing gasoline prices and overall inflation coming down in the last three quarters of 2025.
 

He spoke positively about tariffs, with Supreme Court justices seated just in front of him, saying that he envisions tariffs one day replacing income taxes. While pundits are still analyzing his speech, President Trump closed on a positive note, citing the 250th anniversary of the United States and stating that the country’s best days are still ahead.
 

Tariffs

Last Friday, the Supreme Court ruled that the President did not have the authority to implement tariffs under IEEPA (these tariffs ended on February 24 at 12:00 a.m. ET). Shortly afterward, President Trump addressed the nation to express his displeasure with the decision and announced that he would immediately institute a 10% global tariff (later raised to 15%) under the authority provided by Section 122 of the Trade Act of 1974. This law provides the President with this authority for 150 days from enactment (February 24 at 12:01 a.m. ET). The global tariff does have some exclusions, including energy, critical minerals, and products classified as exempt under USMCA, among others.
 

According to the Tax Foundation, tariffs imposed under Section 122 generate less revenue than those under IEEPA. Raising the Section 122 rate from 10% to 15% would increase collections from $33 billion to $43 billion (the statutory maximum), while the prior IEEPA tariffs brought in about $70 billion. It is unclear whether the President’s authority under Section 122 will face legal challenges. Senate Minority Leader Chuck Schumer (D-NY) has stated that Senate Democrats will not support extending tariffs beyond the 150-day limit. This situation is highly fluid—stay tuned.
 

California

ASA has submitted additional comments to the California Energy Commission opposing a proposed data-reporting requirement for water-heating equipment. This is ASA’s second formal filing since last August, following public testimony in January. The proposal would require manufacturers, distributors, wholesalers, and contractors to report data on every water-heating unit sold or installed in California, imposing a significant burden on the industry. ASA Advocacy will continue working with the CEC and coalition partners to urge the state to withdraw the proposal or adopt a more reasonable, less burdensome system. We will provide updates as they become available.