President Donald Trump leads the largest American delegation in World Economic Forum history to Davos, Switzerland next week—days after the forum’s experts named his trade policy the greatest threat to global stability in 2026.
Last January, Trump appeared virtually warning global CEOs to “make your product in America” or face tariffs. Davos elites hoped his threats were negotiating tools. This time he arrives in person January 21 carrying data showing what his tariff campaign did to the global economy.
The World Economic Forum’s 2026 Global Risks Report ranks “geoeconomic confrontation”—sanctions and tariffs—as the top threat facing the world, jumping eight positions from 2025. Fifty percent of 1,300 surveyed leaders expect a turbulent world over the next two years, up from 36 percent in 2025.
Oxford Economics estimates Trump’s tariffs dragged real GDP down 1.1 percent in 2025 and will impose a 1.4 percent drag in 2026. The president forced double-digit tariffs on nearly every nation. The US oil patch is planning its first production decline as companies cut investment due to pricier steel and supplies—more heavily taxed than Trump’s first term. The Supreme Court is reviewing whether Trump can continue using national security justifications.
No countries successfully fought back except China’s rare earth metals retaliation. Nations accepted the punishment due to US strategic importance—NATO for Europe, nuclear umbrella for Japan and South Korea. But underneath compliance, countries seek alternative markets. Canada and the European Union deepened ties. Regional clubs are forming instead of the multilateral system that defined the post-World War II order.
Foreign Policy Magazine captured the damage: Trump’s tariffs introduced “termites into the woodwork of global trade: not easily seen, but likely to make any structure crumble over time.”
When Trump beamed into Davos virtually January 23, 2025, World Trade Organization Director-General Ngozi Okonjo-Iweala warned: “We have seen this movie before, in the 1930s,” when tariffs deepened the Great Depression. EU Trade Commissioner Valdis Dombrovskis noted the bloc and United States represent 42 percent of the world economy. Bank of America CEO Brian Moynihan suggested tariffs might be negotiable.
Last year they hoped tariffs were bluster. This year the WEF’s risk assessment ranks Trump’s approach as the biggest threat to global stability.
Trump’s delegation includes Treasury Secretary Scott Bessent, Secretary of State Marco Rubio, Commerce Secretary Howard Lutnick, and trade policy head Jamieson Greer. Over 60 heads of state are attending the gathering of 3,000 participants, including 850 CEOs. Microsoft and McKinsey each pledged $1 million to support USA House, the official US headquarters displaying Trump with the slogan “America is back.”
Trump announced he’ll address housing affordability and is expected to repeat his message: 15 percent corporate tax for companies manufacturing in America, but tariffs of 21 percent or higher for others. “Very simply, you will have to pay a tariff,” Trump told last year’s audience, “which will direct hundreds of billions of dollars into our Treasury.”
TIME Magazine notes the irony: “Few places less hospitable to President Donald Trump than Davos.” He gained popularity through “antagonism toward expertise and the global elite.” Yet this marks his third in-person Davos appearance as president. Bloomberg reported Davos is learning to “embrace Donald Trump again.” Corporate leaders need US market access. European leaders need NATO. Trump holds leverage even as his policies top the forum’s risk assessments.
The Supreme Court ruling on whether Trump can use the International Emergency Economic Powers Act for tariffs hangs over 2026. The United States, Canada, and Mexico face contentious USMCA trade agreement review. Fresh tariff investigations await completion on solar power, aircraft engines, and robots. US intelligence analysts believe China’s Xi Jinping ordered forces for Taiwan invasion by 2027. Ian Bremmer wrote in TIME: “This will be the year the bubble bursts on the President’s vision of a Trump-dictated global trade and security order.”
The federal overreach Trump displays internationally mirrors his domestic approach. Colorado Education Commissioner Susana Córdova refused the administration’s April 2025 demand that states certify they eliminated “illegal DEI practices,” risking $800 million in federal funding. The certification violated the Paperwork Reduction Act, lacked definitions, and threatened funding without legal authority. A Maryland judge found the Education Department “initiated a sea change” causing educators to “reasonably fear” lawful speech would be punished. A New Hampshire judge found Trump’s order exceeded authority. Whether education funding or trade access, the administration uses economic tools to enforce policy preferences without clear legal authority.
Three-quarters of WEF survey respondents expect turbulent environmental outlook. Economic risks showed the largest increase in two-year outlook. Business leaders and foreign governments make the same calculation: They can’t afford to alienate the US market, but they can’t rely on US leadership. They’re building alternative relationships while maintaining US ties.
Trump arrives at Davos with something to prove after year one showed economic drag, business uncertainty, and global fragmentation. Last year they hoped his bark was worse than his bite. This year they have data quantifying the damage. The World Economic Forum chose “A Spirit of Dialogue” as its 2026 theme. Trump’s track record suggests he defines dialogue as “accept my terms or pay tariffs.” The termites are in the woodwork. The question is whether the structure withstands another year.
SOURCES
World Economic Forum Global Risks Report 2026, World Economic Forum; Trump to Grab the Spotlight as Global Elite Heads to Davos, Bloomberg; Trump in Davos: What to expect at World Economic Forum’s annual meeting, The National; Why Trump’s Tariffs Are Like Termites, TIME Magazine; Trump’s Tariffs Did Not Make America’s Economy Great Again, Foreign Policy; Davos 2025: Special address by US President Donald Trump, World Economic Forum; Colorado won’t comply with anti-DEI demand from Trump Education Department, Chalkbeat Colorado; Judge strikes down Trump administration effort to defund DEI programs at schools, NPR
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