The de-escalation of tensions between the United States and Iran is redirecting Washington’s attention toward sweeping executive actions in the technology sector, according to a research report from Wolfe Research released on Wednesday.
The report outlines how a potential end to the conflict could reshape the political and macroeconomic landscape, especially as Congress faces a shrinking window before the 2026 midterm elections.
Silicon Valley is alarmed by restrictions on Anthropic
The tech industry is grappling with the fallout from a sudden decision by the Commerce Department to impose strict export controls on Anthropic’s flagship artificial intelligence models—”Mythos” and “Fable.” This move effectively forced the company to completely withdraw the software from the market, including for domestic users.
A leaked letter from Commerce Secretary Howard Lutnick revealed that Anthropic would now be required to obtain individually approved licenses to grant access to the model to any foreign national, including its own employees who are not U.S. citizens.
While the initial dispute was attributed to a communication breakdown and a security threat posed by a foreign entity with alleged ties to the Chinese Communist Party, the White House’s aggressive use of unilateral powers has shifted the risk profile for investors in the technology sector.
“This action demonstrates both the authority and the political will to deploy stringent AI-related control measures,” Wolfe Research noted, adding that the administration’s readiness to halt the distribution of advanced models lends real substance to recent presidential directives, despite public concerns about stifling American innovation.
With only a few working weeks left before the traditional August recess for the House and Senate, the window for passing meaningful legislation is rapidly closing.
The report emphasizes that the only major non-essential bills with a realistic chance of passage are the 21st Century ROAD Housing Act—which recently achieved consensus between House and Senate leadership—and the CLARITY Act, a long-awaited cryptocurrency market structure bill.
However, the likelihood of the cryptocurrency bill becoming law before November has dropped below 50%, due to ongoing bipartisan disputes over stablecoin yields and ethics provisions targeting crypto initiatives tied to the Trump family.
Furthermore, Wolfe Research expressed deep skepticism about President Trump’s calls for a structural increase in the defense budget by $1.5 trillion. Bipartisan hurdles in the budget process and opposition from fiscal conservatives over funding mechanisms make a sustained expansion of baseline spending unlikely.
Instead, the administration is expected to pursue a targeted, one-time supplemental defense package of up to $100 billion to cover direct costs associated with the conflict with Iran.
Despite the potential for lower energy prices following a memorandum of understanding between the U.S. and Iran, the political dividends for the ruling party appear limited. President Trump’s approval rating has been on a steady decline since early 2025, and public dissatisfaction with the war’s progress and its economic consequences remains high.
Wolfe Research maintains its political forecast that Democrats still have a strong chance of securing control of the House in November, while Republicans are likely to retain a narrow majority in the Senate.
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