Global leaders clash over trade, tariffs and technology at Davos

Tuesday 20 January 2026 - 16:50

By: Dakir Madiha

Global leaders clash over trade, tariffs and technology at Davos

World leaders, top policymakers and corporate executives convened in Davos, Switzerland, for the 56th annual meeting of the World Economic Forum, held under the banner of promoting dialogue at a moment of deepening geopolitical rifts and economic uncertainty. Over the course of the week, nearly 3,000 participants from more than 130 countries gathered to debate the future of globalisation, trade tensions, security and artificial intelligence, in what organizers describe as the highest level of public sector participation in the forum’s history. Around 400 senior government officials and more than 60 heads of state joined some 1,700 business leaders, including close to 850 chief executives, underscoring the stakes as governments and markets struggle to navigate a fractured global landscape.

Trade policy and the mounting backlash against tariffs dominated the early exchanges. Chinese Vice Premier He Lifeng delivered a keynote address warning that tariff hikes and trade wars ultimately produce no winners, and argued that countries cannot simply retreat from economic globalisation and turn inward without significant costs. Against the backdrop of a Chinese trade surplus that reached a record 1.2 trillion dollars last year, he portrayed China as a commercial partner rather than a rival, signalling Beijing’s desire to reassure markets and trading partners about its intentions.

From Europe, the message was one of strategic repositioning without abandoning openness. European Commission President Ursula von der Leyen urged the continent to shape what she called a new independent Europe, built on fair trade instead of protective tariffs and on partnership rather than isolation. She insisted that Europe will always choose engagement with the wider world, even as the bloc confronts what she described as historic geopolitical pressures. Her remarks came shortly after the European Union concluded a major trade agreement with the Mercosur group of South American countries, which Brussels presents as a signal of its commitment to rules based commerce.

French President Emmanuel Macron adopted a more stark tone, cautioning that the world is tilting towards an order without rules, in which international law is disregarded and power prevails over principles. He appealed to European states to shed what he characterised as naïveté in the face of this shift and to build genuine economic and strategic sovereignty. His intervention reflected broader European concerns about dependency on external powers, whether for energy, technology or defence, and the need to respond to aggressive use of economic tools such as sanctions and tariffs.

The United States arrived in Davos projecting confidence but also stirring controversy. US Treasury Secretary Scott Bessent, speaking on behalf of President Donald Trump ahead of the president’s scheduled address, told reporters that the Trump administration came to the forum intent on highlighting the strength of the American economy. He dismissed talk of potential European retaliation over Washington’s renewed push to acquire Greenland, describing any such response from European capitals as highly reckless. Trump’s aspirations regarding Greenland, coupled with his threats to impose tariffs of 200 percent on French wine, overshadowed many of the formal discussions and prompted European Union leaders to call an emergency summit in Brussels to coordinate their approach.

Beyond geopolitics and trade, the rapid advance of artificial intelligence and its economic implications featured prominently on the Davos agenda. Microsoft chief executive Satya Nadella warned that AI risks turning into a speculative bubble if its benefits remain confined largely to technology firms rather than spreading across sectors such as health care, education and manufacturing. He described AI computation, counted in so called tokens or basic units of AI processing, as an emerging global commodity, and argued that energy costs will be decisive in determining which countries secure a leading position in the AI race.

Fresh data on corporate sentiment added to the cautious mood. A survey by PwC released during the meeting showed chief executives’ confidence in revenue growth slipping to its lowest level in five years, with only 30 percent expressing optimism about the next 12 months, down from 38 percent in 2025. In parallel, the World Economic Forum’s Global Risks Report 2026 identified geo economic confrontation as the most severe global threat for the year, highlighting the danger that persistent trade disputes, sanctions and economic coercion could entrench rival blocs and weaken multilateral cooperation.

Another WEF study suggested that global supply chains have entered what it called an era of structural volatility. According to the report, 74 percent of business leaders now view resilience as a key driver of growth, after companies reconfigured around 400 billion dollars in trade flows in 2025 in response to escalating tariff measures. For investors, policymakers and executives following international trends, the discussions in Davos underscored a world economy in transition, shaped simultaneously by political rivalry, technological disruption and the search for new frameworks to manage interdependence rather than dismantle it.