Trump’s Tariff Exit, AI Hype And India’s Growth Test: What Will 2026 Look Like?
As 2026 nears, AI hype meets revenue reality, tariffs fade, but India’s growth faces weak demand, rural stress and rising risks.
The Gist
OpenAI's Code Red reflects its struggle against competitors like Google.
- Sam Altman declared a Code Red due to underperformance of OpenAI's chatbot.
- OpenAI's lack of alternative revenue streams heightens the stakes for success.
- Other tech giants like Google and Microsoft have diverse revenue sources to cushion their AI endeavors.
Earlier this month, Sam Altman of OpenAI declared Code Red at the company: the latest version of its chatbot was underperforming Google’s latest offering, Gemini 3. That panic had one simple explanation: he believes artificial intelligence (AI) to be yet another technology service in which the winner takes all. As a pure AI company without any other revenue stream, OpenAI cannot afford not to be the winner. The alternative is to lose all. Code Red, indeed.
Google, Microsoft, Meta, Amazon and even X have all alternate revenue streams to sustain themselves, even as their AI model struggles to find their feet. Not OpenAI. It must show sufficient revenue and sufficient revenue growth to justify its steep valuation.
The logic applies even more strongly in the case of all second-rung AI companies, including Anthropic and Perplexity. France’s Mistral AI could gain, however, from European revulsion against Trump’s America and American tech. Chinese AI would continue to thrive, as would China’s high-end semiconductor industry.
The US economy would continue to grow, but show weakness by way of high unemployment, and lower global demand for the dollar, a trend accentuated by interest rate cuts by the Fed.
AI applications would become more robust next year, as compared to now, enhancing productivity, but not enough to displace workers altogether. People who are trained only in specific skills, and did not use their formal years in education to enhance their general intelligence, could struggle, however.
War Hinges On Washington
America holds the key to ending the Ukraine war. It is not just funds and weapons that the US supplies to Ukraine. The satellite intelligence that Ukraine uses to guide its missiles and even drones to attack deep inside Russia is vital to sustain the war. If the US cuts that supply, the war will end soon.
Russia’s demand that Ukraine hand over virtually all of eastern Ukraine, along with Crimea, looks unreasonable only because of western media’s steadfast refusal to explain that the war is all about Russia being able to retain its only warm-water naval base, the one at Sevastopol in Crimea, and the land route to that base along the Don Bas region to move men and materiel from Moscow or St Petersburg to Sevastopol. Guaranteed access to neither would be possible if Ukraine becomes a member of NATO or is armed to the teeth by NATO to cut off Russia’s access to its naval base.
Trump’s bullying of Venezuela will not go down well in Latin America. However, that might not suffice to prevent Cuba’s collapse, supported, as it is, by Venezuela. But ending the war in Europe would prove a strong enough reason to give Trump the Nobel Peace Prize.
The Gaza Farce
The Gaza peace would have unravelled into the Gaza farce by the end of 2026, with Israel continuing its attacks on Palestinians in Gaza and the West Bank. Hamas would, at best, only pretend to disarm, the promised Peace Committee presided over by Trump would never get going. Gaza’s reconstruction would prove a long haul.
But Syria would see the beginning of extensive reconstruction. If Iran can get its act together, despite internal political dissent, it, too, would start creating a new proto-Capital somewhere where a drought will not create adebilitating shortage of water. Desalination plants are an obvious solution to Iran’s water shortage, but not on the agenda at present, strangely enough.
America First would make it difficult for Trump to chip in with large reconstruction funds for Syria or Ukraine. Europe is too bogged down by the strain of raising fiscal allocations for arms to be able to shell out for Syria’s rebuilding. The Syrians would be happier to take help from China and India than from the Pretender to the Ottoman throne
The end of the Ukraine war should resume Russian exports of commodities from Russia and Ukraine, reviving both economies. Construction firms from Europe, Turkey, the US and China would swarm over Ukraine and the Donbas, competing for airspace with regular locusts.
Growth Without Demand?
The Indian economy should get a boost from the removal of the 25% punitive tariff slab that Trump has put on imports from India for violating sanctions against Russian oil. However, the extremely low rise in food prices that underpin inflation figures in the 0.25%-1.75% range suggests stagnant, if not falling, farm incomes, depressing all rural incomes.
Combined with the cutbacks in employment guarantee outlays, thanks to the scrapping of the demand-driven MGNREGA scheme, demand would struggle to meet the rosy projections underlying the seven per cent-plus growth rate for India in 2026.
If the government had kept its Budget promise to come out with Public Private Partnership policies for infrastructure sectors, there would have been some hope. Growth would come from statistical revisions, rather than economic activity on the ground.
Elections are due next year in Kerala, Tamil Nadu, Puducherry, Assam and West Bengal. The hectic electioneering would create some additional demand in 2026, whoever wins. But that would not push up gross fixed capital formation in the economy to create sustained growth.
Climate change will worsen. Delhiites would continue to choke and writhe in the final three months of the year, as they privilege the joy of filling the skies with smoke from Diwali crackers over the health of their own lungs and the developing brains of their young.
What else does 2026 hold for the world? Here are a few things that caught Janus’s eye:
· AI will manifest its abilities as a technology and its fragility as an outsized expectation of the stock markets in 2026.
· The Ukraine war will end, and Sweden will give Trump the Nobel Prize for peace, even if the terms on which the war concludes might cause disappointment and even hurt in many European capitals, including in Stockholm, and despite American bullying of Venezuela.
· Russian oil, gas, fertilisers and food would start flowing to global markets once again, putting downward pressure on commodity prices.
· The 25% slab of Trump Tariffs levied on India for flouting sanctions on Russian oil would disappear, along with the sanctions against Russia.
· India will get a new series of GDP numbers with a more contemporary base of products and prices, and show rosier growth than under the series that would be superseded.
· Stock markets would climb around the world, including in India, as the Fed proceeds with a combination of rate cuts and bond buybacks, releasing another wave of liquidity washing across the world’s financial markets. A Trump nominee would replace Jerome Powell as the Fed chief.
· Trump will grow more popular with his core base and less popular with the rest. The mid-term elections would see Republicans lose control of the House.
· Europe would see political ructions in several key countries but consolidate European salience, as an economic bloc and as a strategic power centre.
· Chinese growth would revive, and its economy would continue to deepen its technological base. Reconstruction in Ukraine and Syria would give an outlet to Chinese excess capacity in construction-related production arising from China’s detox from a prolonged construction high.
· The football World Cup will be hosted jointly by the US, Canada and Mexico, travellers to the venues would be hassled by visa squabbles, high ticket prices and price gouging by hotels.
· Global migration would slow down, and immigrants everywhere would be under greater pressure to assimilate rather than stick out as alien cultures.
· Japan would continue the long recovery from having the value of the yen almost double against the dollar in the Plaza Accord 40 years ago, from 250 yen to 130 to the dollar, sending prices crashing, interest rates negative, leverage sky-high and asset prices ballooning till the balloon burst.
