Back US-China-Europe Strategy

22V Video: 2Q Update – The Iran Conflict and Broader Policy Outlook for Europe, China and the United States

Published on April 1, 2026

∙ Download the PDF Report

Kim Wallace

Michael Hirson

Jacob Funk Kirkegaard

22V Research’s Jacob Kirkegaard (Europe Strategy/Geopolitics), Michael Hirson (China Strategy), and Kim Wallace (Washington Policy Research) recorded a video today discussing the policy outlook in the Europe, China and US. You can find the link to the replay HERE.

Jacob – The Iran conflict appears to be moving toward a potential de-escalation as the U.S. seeks an off-ramp, but instability in the Strait of Hormuz is likely to persist, sustaining a risk premium in global energy markets. Even under a more coordinated international response, core issues such as Iran’s nuclear program and regional proxy activity remain unresolved. In Europe, the resulting commodity shock is expected to be far more contained than in 2022, suggesting only limited pressure on the ECB to tighten further. Meanwhile, the Ukraine war shows little path to resolution, with current peace efforts unlikely to succeed and the conflict potentially extending for several more years.

Michael – China is relatively well-positioned to weather the Iran crisis, supported by a diversified energy mix and stockpiled oil. While elevated energy costs will promote reflation in China, they will also squeeze margins for industry and hurt China’s exports through weaker global demand. Q2 growth will slow sequentially due to these factors and fading fiscal stimulus. Beijing will gain incremental geopolitical leverage from the crisis relative to the U.S., setting the backdrop for Trump’s mid-May visit to China. Domestically, Beijing remains focused on executing its latest five-year plan, with an emphasis on industrial upgrading and technological self-sufficiency, especially in AI and automation.

Kim – In the U.S., domestic economic concerns—particularly inflation and affordability—continue to dominate both public sentiment and the policy agenda, outweighing geopolitical developments. Key near-term issues include the timing and viability of the Warsh Fed leadership decisions, ongoing negotiations around defense supplemental spending, and the direction of trade policy amid upcoming U.S.-China discussions. While there is still broad support for NATO engagement, legislative timelines and political constraints could delay action on key priorities. As the midterm cycle ramps up, with a dense primary calendar ahead, policy uncertainty is likely to increase, with direct implications for markets.

DISCLOSURES AND DISCLAIMERS

Analyst Certification

The analyst, 22V Research Group, primarily responsible for the preparation of this research report attests to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers; and (2) that no part of the research analyst’s compensation was, is, or will be directly related to the specific recommendations or views in this research report.

Analyst Certifications and Independence of Research.

Each of the 22V Research analysts whose names appear on the front page of this report hereby certify that all the views expressed in this Report accurately reflect our personal views about any and all of the subject securities or issuers and that no part of our compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views of in this Report.

22V Research (the “Company”) is an independent research provider. The Company is not a member of the FINRA or the SIPC and is not a registered broker dealer or investment adviser. 22V Research has no other regulated or unregulated business activities which conflict with its provision of independent research.

22V Research, LLC is a professional services and independent publication organization. 22V Research, LLC is not a securities broker-dealer, not a member of the Financial Industry Regulatory Authority (FINRA), not a registered investment advisor (RIA) and not a member of SIPC.

Securities transactions, when offered, are offered by 22V Securities, LLC through LPS Capital, LLC. Certain employees of 22V Securities, LLC are dually registered as securities representatives of LPS Capital, LLC or Analyst Hub Securities, LLC. 22V Securities, LPS Capital and Analyst Hub Securities are members FINRA, SIPC.

https://brokercheck.finra.org/

Current Ratings Definition.

SECTOR OUTPERFORM: An “outperform” rating anticipates the company will outperform the S&P Regional Banking Index (peer group).

SECTOR PERFORM: A “market perform” rating anticipates the company will perform in line with the S&P Regional Banking Index (peer group).

SECTOR UNDERPERFORM: An “underperform” rating anticipates the company will underperform the S&P Regional Banking Index (peer group).

Limitation Of Research And Information.

This Report has been prepared for distribution to only qualified institutional or professional clients of 22V Research Group. The contents of this Report represent the views, opinions, and analyses of its authors. The information contained herein does not constitute financial, legal, tax or any other advice. All third-party data presented herein were obtained from publicly available sources which are believed to be reliable; however, the Company makes no warranty, express or implied, concerning the accuracy or completeness of such information. In no event shall the Company be responsible or liable for the correctness of, or update to, any such material or for any damage or lost opportunities resulting from use of this data. Nothing contained in this Report or any distribution by the Company should be construed as any offer to sell, or any solicitation of an offer to buy, any security or investment. Any research or other material received should not be construed as individualized investment advice. Investment decisions should be made as part of an overall portfolio strategy and you should consult with a professional financial advisor, legal and tax advisor prior to making any investment decision. 22V Research Group shall not be liable for any direct or indirect, incidental or consequential loss or damage (including loss of profits, revenue or goodwill) arising from any investment decisions based on information or research obtained from 22V Research Group.

Reproduction And Distribution Strictly Prohibited.

No user of this Report may reproduce, modify, copy, distribute, sell, resell, transmit, transfer, license, assign or publish the Report itself or any information contained therein. Notwithstanding the foregoing, clients with access to working models are permitted to alter or modify the information contained therein, provided that it is solely for such client’s own use. This Report is not intended to be available or distributed for any purpose that would be deemed unlawful or otherwise prohibited by any local, state, national or international laws or regulations or would otherwise subject the Company to registration or regulation of any kind within such jurisdiction.

Copyrights, Trademarks, Intellectual Property.

22V Research Group, and any logos or marks included in this Report are proprietary materials. The use of such terms and logos and marks without the express written consent of 22V Research Group is strictly prohibited. The copyright in the pages or in the screens of the Report, and in the information and material therein, is proprietary material owned by 22V Research Group unless otherwise indicated. The unauthorized use of any material on this Report may violate numerous statutes, regulations and laws, including, but not limited to, copyright, trademark, trade secret or patent laws.