DAVOS, Switzerland. When President Trump addressed the World Economic Forum on January 21, 2026, he intended to project American strength. What he projected instead was American unreliability. And in the currency of global influence, unreliability is fatal.
Within hours of the speech, European leaders were discussing de-risking from the United States. The same language they previously reserved for China. The question in the halls of Davos was no longer whether to reduce dependence on Washington, but how fast.
The Demand for Tribute
Trump opened with demands. He wanted Greenland. He wanted OPEC to lower oil prices. He wanted the Federal Reserve to cut interest rates. He wanted Europe to accept higher trade deficits. He wanted pharmaceutical companies to raise prices in France. He wanted, in short, tribute from the entire world.
To enforce these demands, he threatened tariffs on eight European nations. He mocked Swiss President Keller-Sutter as difficult and claimed he punished Switzerland with 39% tariffs after she rubbed me the wrong way. He called out Canadian Prime Minister Carney by name: Canada lives because of the United States. Remember that, Mark.
This is the language of empire. The problem is that empires require follow-through.
The Retreat
Within hours, Trump reversed almost everything. The European tariffs were cancelled. The military threat against Greenland was walked back. He claimed a framework deal with NATO that did not exist. Danish officials said there had been no discussions. Greenland Prime Minister said he had no idea what was in it. NATO denied any compromise on sovereignty.
Reuters reported the reversal came after pressure from his own aides, who opposed threatening a NATO ally with invasion. The leader of the free world had to be talked down by his staff from attacking Denmark.
Wall Street has a name for this pattern: the TACO trade. Trump Always Chickens Out. But the trading floors miss the point. Every threat followed by retreat damages American credibility. Every bluff that gets called teaches the world that American words mean nothing.
Who Gained Power
While Trump blustered, Chinese Vice Premier Li Hefeng offered a different vision. We cannot completely reject globalisation and retreat to self-imposed isolation, he told Davos. Beijing is positioning itself as the stable alternative. The reliable partner. The adult in the room.
Trump helped them. He praised Xi Jinping as an incredible man whose achievements are amazing. He revealed he stopped using the term China virus at Xi's personal request. He threatened America's closest allies while softening his tone toward its main rival.
The European Union gained something too: unity. Trump's Greenland ultimatum triggered more cohesion among the twenty-seven member states than Brussels has achieved in years. Even right-wing parties that typically support Trump joined the backlash. European Commission President von der Leyen declared: If this change is permanent, then Europe must change permanently, too.
Who Lost Power
The Federal Reserve found itself under siege. Trump mocked Chair Jerome Powell as too late and promised to announce his replacement very soon. Powell, now facing a federal criminal investigation that many see as politically motivated, pushed back: Public service sometimes requires standing firm in the face of threats.
If the Fed loses its independence, the dollar loses its credibility as a reserve currency. And that credibility is the foundation of American financial influence worldwide. Trump is trading long-term structural power for short-term political points.
Ukraine lost too. President Zelensky, desperate for American support, watched Trump threaten European allies while praising Xi. Instead of taking the lead in defending freedom worldwide, Zelensky told Davos, Europe looks lost trying to convince the U.S. A leader whose country depends on American weapons, publicly questioning American leadership.
The Carney Doctrine
Canadian Prime Minister Mark Carney delivered the real speech of Davos 2026. The old order is not coming back, he declared. Nostalgia is not a strategy. Great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion.
Carney called for middle-sized powers to build their own networks, independent of both Washington and Beijing. Trump's speech the next day was the best advertisement for that vision. Here was the American president proving exactly why the world needs alternatives.
French President Macron described it as a shift towards a world without rules, where international law is trampled under foot, and where the only law that seems to matter is that of the strongest. ECB President Lagarde walked out of a dinner speech by Trump's Commerce Secretary, reportedly finding it repellent.
The Influence Equation
American influence rests on three pillars: military power, economic leverage, and the perception of reliability. Trump has the first. He is actively undermining the second with chaotic tariff threats. And he has destroyed the third.
Allies are asking: If the United States will threaten Denmark with invasion over an Arctic territory, what will it do to us? If American policy changes by the hour based on presidential mood, how can we build long-term partnerships? If the president praises our rivals while threatening our interests, where does that leave us?
These questions are being answered in trade negotiations, defense agreements, and currency arrangements around the world. The answers are not favoring Washington.
Carney was right. This is not a transition. This is a rupture. And Trump is accelerating it with every speech.
“The old order is not coming back. Nostalgia is not a strategy. Great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion.”
— Mark Carney, Canadian Prime Minister
The Influence Damage
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