Swaminomics: More Real Estate Salesman Than Statesman, Trump’s Era May End in 2026

In 2025, U.S. President Donald Trump surprised his critics with his approach to tariffs and the global economic order. Despite fears of a recession, both India and the U.S. recorded robust growth, driven largely by the AI boom and Trump’s deal-making style. Yet, rising unemployment and heavy reliance on AI could pose challenges to “Trumpism” in 2026.

Trump’s Bold Moves
At the start of 2025, Trump delivered a landmark speech to the U.S. Congress, signaling three key points: massive tariff hikes, a breakdown of the rules-based global economic order, and America stepping back from its role as global policeman. Ironically, it was this rules-based order and global policing that fueled the fastest economic growth the world had seen since World War II.

Fear of Recession
By April, Trump announced his ‘Liberation Day’ plan, threatening tariffs of up to 150% on China and 30% on other countries. Retaliatory tariffs soon followed, creating fears of a deep global recession. Stock markets, including in India, saw sharp declines.

Unexpected Growth
Yet, contrary to expectations, both India and the U.S. posted unexpectedly high growth rates. The U.S. grew at 4.3% in the last quarter, while India surged at 8.2%. How? The feared tariffs were never fully implemented.

Rare Earth Reality
The world initially took Trump very seriously, but in reality, he is more a real estate salesman than a statesman. While he made grand tariff threats, he moderated them through negotiations. He also avoided confrontation with China over rare earth minerals, given China’s strategic dominance in the sector.

Tariff Impact
Experts initially feared a 26% impact on U.S. imports, but the real effect was just around 10%. Many countries, including China and India, rerouted goods via third countries to avoid tariffs. American importers pre-stocked goods to minimize impact. Where high tariffs were unavoidable, the burden was shared between importers and exporters. Consequently, inflation remained under control. In November, U.S. retail inflation stood at 2.8%, down from 3% in October. With strong growth and moderate inflation, the Federal Reserve cut interest rates, boosting U.S. stock markets. Trump thus scored a win in the first year of his second term.

Rising Unemployment
Looking ahead to 2026, challenges loom for Trumpism. While AI fueled growth in 2025, it did not create proportional employment. Despite robust GDP growth, U.S. unemployment rose from 4% in January to 4.6% by November.

Parliamentary Elections
Will AI continue to support the U.S. economy in 2026? If the AI boom slows, the sector could stagnate. Rising inflation and slower growth may lead to heavy losses for Trump in the November 2026 midterm elections, giving Democrats a majority in both houses and potentially paralyzing his government.

Impact on India
What does this mean for India? The Indian economy remains closely tied to global trends. A global slowdown in 2026 could impact India, though strong macroeconomic fundamentals and a growing supply of STEM graduates are significant advantages. While some economists forecast India’s growth slowing to 4.5% in 2026–27, I remain optimistic about India’s prospects.

Conclusion
Trump may have dazzled critics in 2025, but the real test of his policies—and of “Trumpism”—will unfold in 2026. Meanwhile, India appears poised to weather global turbulence better than many.