Peak Trump: Five Predictions for 2026

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Has any year in memory started with such a bang as 2026? In little over seven days, Donald Trump’s America has captured the Venezuelan president and declared control of the country and its oil. The president has tossed out threats to Cuba, Colombia, Mexico, Greenland, and Iran. Two oil tankers linked to Venezuelan oil exports were seized. And America withdrew from 66 UN and international organisations.

The world is dealing with a Trump unbound: a president who feels unconstrained at home and is asserting America’s right to act internationally wherever it can get away with it.

«Prediction is very difficult, especially if it’s about the future,» Niels Bohr famously said. He was right. Black swan events defy predictability because they are by definition «unknown unknowns.» Danish physicist Per Bak studied avalanches, discovering that each grain of snow increases the probability of collapse—yet we still can’t predict when or how large the avalanche will be.

So much of what is happening now seems to depend on these binary avalanche moments: hyperbolic AI spending, simmering public anger, mounting fiscal pressures. Compounding the uncertainty, the world’s most influential nation is run by a reality show host who understands that each successive conflict must outdo its predecessor to command our attention.

Yet prediction remains valuable. Evaluating contingencies is the essence of risk management. What follows are possibilities that are provocative by nature but plausible in substance—meant to provoke thought rather than predict with false precision.

1. Peak Trump: The Midterm Reckoning

Trump begins his second term with unified Republican control and an ambitious agenda. But America’s affordability crisis emerges as the defining issue. Groceries remain 30 per cent more expensive than five years ago. Mortgage rates stay elevated. The «Big Beautiful Bill» is increasingly perceived as a wealth transfer from middle class to wealthy—tax cuts for corporations and billionaires funded by reduced services for ordinary Americans.

Meanwhile, many tire of Trump’s relentless assault on America’s most trusted institutions: courts, universities, the Federal Reserve, media outlets. Even attempts to twist the arm of the Nobel Prize committee.

Trump’s brazen monetization of public office continues apace as government favor blurs with private gain. Each transgression alone might pass unremarked, but the accumulation builds pressure like Bak’s grains of sand.

The prediction: 2026 marks «peak Trump.» Republicans suffer significant losses in midterm elections, surrendering their House majority and several governorships. The avalanche begins with independents who backed Trump for economic competence, now disillusioned by poor results. Suburban moderates recoil as ICE raids and National Guard deployments grow more aggressive. Each defection makes the next easier.

The pivotal moment: Republican candidates in competitive districts actively avoid Trump’s endorsement—falsifying the loyalty test that has defined the MAGA movement since 2016.

2. The Tariff Collapse

Trump has imposed sweeping tariffs using executive authority, claiming national security justifications. Legal challenges are working through federal courts. Economic data shows minimal manufacturing reshoring while consumer prices have risen.

The Supreme Court rules 6-3 that Trump’s tariff regime exceeds executive authority. The majority opinion holds that tariffs of this magnitude constitute taxation, which the Constitution reserves to Congress. «No taxation without representation» was the battle cry many Americans died for in their battle for independence—the Court will not permit its circumvention by executive whim.

The prediction: Despite initial threats, Trump abandons tariffs within 90 days. Polling shows 68 per cent opposition, and key Republican senators refuse authorization. Tariffs have produced no meaningful reduction in trade dependence on China or curbed its export dumping practices. Supply chains proved more resilient than anticipated. The consensus, even among initial supporters: «America First» has actually strengthened China’s position as it redirects exports to other markets (ASEAN, EU, Global South) and deepens those relationships while the US ends up more isolated.

What remains are minor bilateral adjustments with smaller nations and face-saving rhetoric—a mountain of theater producing a molehill of results. As the famous Arabic proverb goes: «The dogs bark and the caravan moves on.»

«»America First» has actually strengthened China’s position, while the US ends up more isolated.»

3. Dollar Decline and Fiscal Reckoning

The United States runs trillion-dollar deficits with mounting budget and trade imbalances. Debt service costs approach $1 trillion annually. Trump’s tax cuts, increased defense spending, and lack of tariff revenue create a fiscal trajectory that finally alarms bond markets.

The prediction: The dollar weakens 12-15 per cent through 2026. Ten-year Treasury yields rise to 5.2 per cent, their highest sustained level since 2007. For the first time in modern history, annual debt service costs exceed the defense budget—a harbinger of imperial decline that has preceded the fall of every major power from Rome to Britain. The era of consequence-free deficit spending begins its end.

Gold becomes the primary beneficiary, rising 35 per cent to breach $6100 per ounce as central banks diversify reserves, another indication of evaporating trust in Trump’s combative policies.

The consequences: mortgage rates remain elevated (averaging 7.5 per cent), locking out first-time homebuyers. Marriage and birth rates continue declining. Funding for health care, infrastructure and research face pressure as debt service and increased defence spending crowds out discretionary spending. The political space for lax deficit spending collapses.

4. The AI Reckoning

Markets have priced in transformative AI returns, with capital expenditures on AI infrastructure running at $500+ billion annually. Valuations have soared on AI hopes and promises.

Bain & Company recently estimated that this level of capex will require $2 trillion in annual revenue to earn an adequate return on investment. Yet current estimates of revenues being generated by AI range from only $40 billion to $250 billion—a massive gap between investment and return.

The problem isn’t that AI fails; it’s that it succeeds as a useful tool rather than a revolutionary force. It’s the PC in 1985, not the internet in 1998; lots of PC competitors but only one Google.

The prediction: Stock markets suffer a sharp 25 per cent correction between March and August 2026, driven by AI sector repricing. Credit default swaps for leveraged AI infrastructure companies spike to distressed levels. However, the correction proves contained. The underlying economy remains resilient, and markets finish the year down 8 per cent, having recovered much of the panic-driven losses.

Capital expenditure on AI infrastructure falls 40 per cent in 2027 as companies demand proof of returns. The «AI will replace all jobs» narrative loses credibility.

5. The Federalism Renaissance

Trump’s second term features aggressive assertions of executive power. But state governors and attorneys general—both Republican and Democratic—push back on federal overreach. The Supreme Court’s tariff ruling establishes its willingness to check executive power.

The prediction: A renaissance of federalism emerges as America’s functional response to executive overreach. In a landmark 7-2 decision, the Supreme Court rules that while the President has significant foreign policy authority, domestic policy implementation requires either congressional authorization or deference to state sovereignty. Chief Justice Roberts writes that «USA» means «United States of America»—a federation of sovereign states, not vassals to whoever occupies the White House.

The Court’s approval rating climbs from 41 per cent to 58 per cent, the highest in two decades. State-level innovation flourishes. Blue states create climate agreements and immigrant protections. Red states experiment with education reform and deregulation.

Congress suffers the inverse fate. The 2026 midterms see unprecedented retirements—over 60 per cent of incumbents either lose primaries or decline reelection. A younger, less ideologically entrenched cohort enters office, many pledging to fight for constituents rather than defer to executive power.

The System’s Correction

These five predictions share a common theme: systems under stress seeking equilibrium. Political coalitions fracture when promises fail. Courts reassert constitutional limits when executive power overreaches. Markets correct when valuations detach from fundamentals. Fiscal realities eventually constrain even the most powerful nations.

The year 2026 may mark the moment when America’s constitutional immune system—designed by the Founders for precisely this purpose—finally activates fully. The separation of powers, federalist structure, and market mechanisms all work to constrain excesses and force corrections.

«The year 2026 may mark the moment when America’s constitutional immune system—designed by the Founders for precisely this purpose—finally activates fully. The separation of powers, federalist structure, and market mechanisms all work to constrain excesses and force corrections.»

Whether these corrections produce renewal or simply delay reckoning with deeper structural problems remains the question for 2027 and beyond. But Per Bak’s avalanche will come. The only question is whether the system’s self-correction mechanisms function as designed, or whether the accumulating grains of snow finally trigger a collapse no institution can contain.

I am reminded of Yeats‘ «The Second Coming,» written in 1919 as the world emerged from war and pandemic:

Mere anarchy is loosed upon the world;

The best lack all conviction, while the worst

Are full of passionate intensity;

Things fall apart; the centre cannot hold.

The answer will define not just 2026, but the generation to come.