On the eve of the World Economic Forum's 56th annual meeting in Davos, the organization released its 2026 Global Risks Report with a stark finding: geoeconomic confrontation between major powers has emerged as the top threat to global stability, overtaking concerns about climate change, misinformation, and armed conflict that dominated previous years' assessments.

A Dramatic Reshuffling of Global Concerns

The elevation of economic confrontation to the top risk spot represents a dramatic reshuffling from prior years. In 2025, geoeconomic confrontation ranked third behind misinformation and extreme weather events. Its rise to the top position reflects the profound impact that tariffs, sanctions, and trade restrictions have had on the global economy over the past year.

The report defines geoeconomic confrontation as "the use of economic tools—including sanctions, tariffs, investment restrictions, and export controls—for geopolitical purposes." This category of risk has intensified dramatically since President Trump's inauguration, as the United States has implemented sweeping tariff measures affecting virtually every major trading partner.

"After months of announcements on new US tariffs and sanctions under President Donald Trump, 'geoeconomic confrontation' shot from third to first on the list of concerns, leapfrogging 'extreme weather events.'"

— World Economic Forum analysis

The Highest Tariffs Since the Great Depression

The WEF report comes as U.S. tariff rates have reached their highest levels since the Great Depression. The Trump administration's "reciprocal tariff" policy has imposed double-digit taxes on imports from nearly every nation, disrupting global commerce and straining the budgets of consumers and businesses worldwide.

For investors and business leaders, the tariff environment has created extraordinary uncertainty. Supply chains that took decades to build have been upended in months, forcing companies to rapidly reassess sourcing strategies, manufacturing locations, and pricing models.

2026 Top 5 Global Risks (WEF Report):

  • 1. Geoeconomic Confrontation (up from #3)
  • 2. Misinformation and Disinformation (down from #1)
  • 3. Societal Polarization (unchanged)
  • 4. Extreme Weather Events (down from #2)
  • 5. State-Based Armed Conflict (unchanged)

Trump Administration Brings Largest U.S. Delegation Ever

Against this backdrop, President Trump is leading the largest American delegation in the 56-year history of the annual meeting. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, Energy Secretary Chris Wright, Secretary of State Marco Rubio, and Middle East special envoy Steve Witkoff will all attend, signaling the administration's intent to engage directly with global business and political leaders.

For Trump, this marks his third in-person appearance in Davos—a venue that represents the "high temple" of the multilateral global order his policies have deliberately challenged. The administration's presence is expected to dominate discussions and attract intense scrutiny from attendees seeking clarity on U.S. trade and foreign policy intentions.

"Trade Will Be a Hot Topic"

WEF President Borge Brende acknowledged that trade would dominate discussions at this year's gathering. "With the US continuing to push for tariffs and taking more of a protectionist approach, trade will be a hot topic," Brende told reporters. However, he sought to strike an optimistic note, pointing to signs that trade tensions may have eased somewhat in late 2025.

The forum's theme—"A Spirit of Dialogue"—reflects organizers' hopes that Davos can serve as a venue for constructive engagement on contentious issues. Whether that spirit will translate into meaningful progress remains to be seen, given the profound policy disagreements separating the United States from many of its traditional allies.

Warning Signs for Markets

Geopolitical strategist Ian Bremmer offered a sobering assessment ahead of the meetings: "This will be the year the bubble bursts on the President's vision of a Trump-dictated global trade and security order." Bremmer's warning suggests that the accommodation many countries showed to U.S. demands in 2025 may give way to more assertive resistance in 2026.

For investors, the WEF report reinforces the importance of geopolitical risk management. Companies with complex global supply chains, significant export exposure, or operations in countries at odds with U.S. policy face elevated uncertainty that may not be fully reflected in current valuations.

Climate Concerns Decline But Don't Disappear

The report's demotion of extreme weather events from second to fourth place drew attention from climate advocates, though WEF officials emphasized that environmental risks remain acute. The shift likely reflects the immediate and visible impacts of trade disruptions, rather than any fundamental reduction in climate-related risks.

Over a longer time horizon, climate-related risks continue to rank among the most severe in the WEF's assessment. The report notes that physical climate impacts, biodiversity loss, and resource scarcity remain critical concerns that require sustained attention even as short-term economic anxieties dominate headlines.

What to Watch at Davos

As world leaders convene from January 19-23, several key themes will merit attention:

  • U.S. Trade Policy Signals: Any indication of tariff moderation or escalation from the Trump administration.
  • Allied Responses: How European, Asian, and other leaders respond to U.S. demands.
  • Corporate Adaptations: How major companies are adjusting strategies to navigate the new trade environment.
  • Technology Governance: Discussions about AI regulation and tech competition between major powers.
  • Middle East Developments: Updates on regional dynamics following recent de-escalation efforts.

Investment Implications

The WEF's identification of geoeconomic confrontation as the top global risk suggests investors should maintain heightened attention to trade policy developments. Diversification across geographies, currencies, and supply chains may prove valuable in an environment where policy changes can rapidly reshape competitive dynamics.

Companies with primarily domestic revenue bases and limited reliance on imported inputs may offer relative safety, while those with complex international operations face elevated uncertainty that warrants careful monitoring.