Jonathan Kilman, Chairman
Converge Public Strategies – November 2025
Executive Summary
The practice of government affairs has entered a period of rapid evolution. As Washington rebalances its reach—scaling back in some areas while asserting new authority in others—state and local governments have stepped forward as decisive partners in shaping the business environment.
This paper reviews the key policy and intergovernmental trends of 2025, explores the industries where the impact has been most pronounced, and offers a grounded look at what companies should expect as 2026 approaches.
I. Introduction
Anyone working with government in 2025 could feel the shift. The balance of policymaking power no longer flows solely from Washington. Federal agencies remain dominant in trade, immigration, and technology policy, yet states and localities have become the places where real projects take root—whether through site-selection incentives, infrastructure partnerships, or the testing of new regulatory models.
At Converge Public Strategies, we’ve seen clients from manufacturing to mobility grappling with this reality. We’ve had regular conversations with clients whose government affairs needs fluidly evolve from federal to state/local and back. To succeed, organizations now need a layered strategy: one that interprets federal direction, leverages state programs, and aligns with local execution.
II. The 2025 Landscape: Realignment and Local Activation
A. Federal Retrenchment—And Reassertion
While much of Washington’s rhetoric focused on “streamlining government,” in practice federal engagement deepened in several strategic arenas:
- Trade and tariffs: Federal agencies coordinated closely on enforcement. The U.S. Trade Representative, CBP, and the Commerce Department all played visible roles in reshaping tariff structures and tightening origin verification. [1]
- Technology and industrial security: The Commerce Department’s Bureau of Industry and Security issued a sweeping rule on connected-vehicle cybersecurity—the clearest signal yet that industrial policy remains an active federal domain (and also a signal that connected-vehicles will continue to be an important technological evolution). [2][3]
- Immigration and workforce: Labor-intensive industries felt the impact of renewed visa scrutiny and stepped-up federal enforcement, even as states pursued their own workforce initiatives. This required industries to re-evaluate their workforce and growth plans.
- Regulatory efficiency: Despite talk of deregulation, 2025 brought complex new compliance regimes in strategic technologies such as autonomous systems and drones. [2][4]
The result: less bureaucracy in some corridors, far more oversight in others.
B. State and Local Agility
In contrast, governors and mayors used 2025 to compete aggressively for investment.
- Incentive innovation: Economic-development agencies linked traditional tax credits with workforce-training funds, expedited permitting, and infrastructure commitments.
- Policy experimentation: More than a thousand AI-related bills were introduced nationwide, reflecting states’ eagerness to shape technology governance in the absence of a single federal standard. [5] Government affairs clients represent a broad array of policy perspectives about AI regulation.
- Execution partnerships: Local governments became indispensable project partners—helping secure zoning, utilities, and workforce pipelines that turn policy concepts into ground-level results. The rising demand for data centers, for instance, required rapid collaboration of clients across government agencies.
III. How Government Affairs Is Changing
Integrated Engagement
Modern advocacy now spans the full vertical of government. A company reshoring production may coordinate with the USTR on tariff exposure, negotiate incentives with a state agency, and work with a city on site permitting—all at once.
From Advocacy to Risk & Opportunity Management
Government affairs professionals have effectively become risk officers and opportunity scouts.
- Manufacturers map tariff exposure while leveraging state expansion grants.
- Technology firms monitor AI rules in multiple states while addressing federal export controls.
- Drone and logistics companies work with the FAA, state aviation boards, and local planners to establish new flight corridors. [4]
Cross-Functional Collaboration
In 2025, successful teams broke down silos. Policy, legal, and operations now move in sync—particularly when projects involve permitting or multi-state compliance.
Data-Driven Strategy
Firms are investing in analytics to anticipate regulatory movement. Tools that once tracked legislation now model risk and ROI. [6] Government affairs professionals are required to track data in real-time, convert it to actionable information, and provide meaningful risk and opportunity assessments.
IV. Industries in Flux
1. Artificial Intelligence & Digital Assets
Federal direction remains unsettled. The Congressional Research Service reports multiple competing frameworks for AI oversight, while Pew Research Center found that fewer than one in four Americans trust the federal government to manage AI effectively. [7][8]
Businesses deploying AI must therefore watch both Capitol Hill and the states, where algorithmic-transparency and deep-fake statutes are proliferating.
2. Transportation & Autonomous Systems
Transportation regulation is converging around safety and supply-chain security. The Commerce Department’s connected-vehicle rule and the DOT’s proposed drone-operations framework will redefine compliance obligations for automakers, carriers, and logistics networks. [2][4]
3. Gaming / Sports Betting
By late 2025, more than three dozen states had legalized sports betting in some form. Congress responded with the proposed SAFE Bet Act, which would set certain minimum national standards and reporting requirements. [9][10][11]
4. Drone Technologies / Unmanned Aircraft Systems
A new FAA rule would authorize “beyond-visual-line-of-sight” operations, opening the door to routine commercial deliveries and inspections. [4] For local governments, that means new zoning questions and economic-development opportunities; for companies, it means early engagement with regulators is crucial.
5. Social Media & Platforms
State-level action on content governance, data privacy, and youth-safety legislation accelerated in 2025, creating a mosaic of rules that social-media firms must reconcile alongside any future federal framework. [5]
6. Clean Energy & Reshoring
Industrial policy is driving a new generation of incentive deals combining federal tax credits with state and municipal infrastructure support. Government affairs teams are increasingly embedded in site-selection and permitting processes to capture these opportunities. Opportunities vary across jurisdictions. We have seen proposed nuclear energy projects draw mixed responses, with some jurisdictions opening the door and others remaining skeptical.
V. Looking Ahead to 2026
Federal Focus
Washington will likely stay aggressive where national security and economic resilience intersect: tariffs, export controls, AI, and supply-chain integrity. [1][2][7] Federal guidance on digital assets and a potential sports-betting baseline could also emerge. [10][11][12]
State and Local Dynamics
The competition for high-value projects will intensify. Some states will likely deploy larger, performance-based incentives; city and county governments will remain critical to execution, particularly for autonomous-vehicle corridors, drone hubs, and clean-energy siting. [5][4]
Evolving Practice
Government affairs teams in 2026 will:
- Conduct scenario-planning that links policy shifts to business outcomes. Firms capable of providing this deeper insight will offer enhanced value.
- Quantify advocacy results in financial terms—tax savings, incentive value, or avoided penalties.
- Operate as partner-strategists, not external lobbyists. Clients that recognize this opportunity will receive greater return.
VI. Conclusion
Heading into 2026, the convergence of federal assertiveness and subnational innovation defines the U.S. policy environment. Organizations that embed government affairs into core decision-making—treating it as strategy rather than reaction—will navigate this era most effectively.
At Converge Public Strategies, we see this shift daily: clients succeed when they build relationships across all levels of government and translate policy insight into operational advantage.
Sources
[1] Reuters. Trump Supreme Court tariff defeat would add trade uncertainty. Nov 6 2025. https://www.reuters.com/world/us/trump-supreme-court-tariff-defeat-would-add-trade-uncertainty-2025-11-06
[2] U.S. Department of Commerce, BIS. Securing the Information and Communications Technology and Services Supply Chain—Connected Vehicles (Final Rule). Federal Register, Jan 16 2025. https://www.federalregister.gov/documents/2025/01/16/2025-00592/securing-the-information-and-communications-technology-and-services-supply-chain-connected-vehicles
[3] BIS Connected Vehicles Program Overview. https://bis.doc.gov/index.php/policy-guidance/ict-supply-chain/connected-vehicles
[4] Reuters. U.S. proposes new drone rules that could lead to Starbucks, Amazon deliveries. Aug 5 2025. https://www.reuters.com/world/us/us-proposes-new-drone-rules-that-could-lead-starbucks-amazon-deliveries-2025-08-05
[5] Retail Industry Leaders Association (RILA). AI Legislation Across the States: A 2025 End-of-Session Recap. Sept 8 2025. https://www.rila.org/blog/2025/09/ai-legislation-across-the-states-a-2025-end-of-ses
[6] Quorum. How AI Is Transforming Government Relations—from Routine Tasks to Strategic Impact. 2025. https://www.quorum.us/blog/how-ai-is-transforming-government-relations-from-routine-tasks-to-strategic-impact
[7] Congressional Research Service. Regulating Artificial Intelligence: U.S. and International Approaches (R48555). June 4 2025. https://crsreports.congress.gov/product/pdf/R/R48555
[8] Pew Research Center. How the U.S. Public and AI Experts View Artificial Intelligence. Apr 3 2025. https://www.pewresearch.org/internet/2025/04/03/how-the-us-public-and-ai-experts-view-artificial-intelligence
[9] CBS Sports. U.S. Sports Betting: Where All 50 States Stand on Legalizing Online Sports Betting Sites & Proposed Legislation. Updated 2025. https://www.cbssports.com/betting/news/u-s-sports-betting-where-all-50-states-stand-on-legalizing-online-sports-betting-sites-proposed-legislation
[10] U.S. Senate. S.1033 — SAFE Bet Act (119th Congress). Introduced 2025. https://www.congress.gov/bill/119th-congress/senate-bill/1033
[11] U.S. House of Representatives. H.R.2087 — SAFE Bet Act (119th Congress). Introduced Mar 11 2025. https://www.congress.gov/bill/119th-congress/house-bill/2087
[12] White & Case LLP. AI Watch: Global Regulatory Tracker—United States. 2025. https://www.whitecase.com/insight-our-thinking/ai-watch-global-regulatory-tracker-united-states