5 Geopolitical Shocks Coming in 2026 (China, Trump, & War) | Jacob Shapiro & Marko Papic

Episode Overview

• The episode presents a series of geopolitical and economic forecasts for the year 2026, focusing on global trade, energy markets, and regional conflicts.
• A central point of debate is the future of US-China trade policy, with one host predicting a decrease in tariffs and an end to "de-globalization hysteria," while the other foresees an intensification of the trade war.
• The hosts converge on a forecast for European energy prices, predicting normalization driven by a global glut of Liquefied Natural Gas (LNG), which they argue will debunk the narrative of European de-industrialization.
• The discussion also explores the idea that Middle Eastern conflicts will remain contained and largely irrelevant to global markets, while highlighting potential blind spots like the disruptive "export model" of states like North Korea.

Key Concepts

• US-China Tariff Disagreement: A core debate on whether a potential Trump administration would lower tariffs on China (Marko's view) or "double down" on protectionism after securing the North American trade bloc (Jacob's view).
• Peak De-globalization: The theory that the trend of increasing trade barriers and economic fragmentation will hit its high point in 2025 and begin to recede.
• USMCA Renewal: A forecast that the United States–Mexico–Canada Agreement will be renegotiated and renewed smoothly and without major conflict by the end of 2026.
• European Energy Normalization: A consensus forecast that European energy prices, particularly in Germany, will begin to normalize in 2026, ending the continent's energy crisis.
• The LNG Glut: The primary driver for lower European energy prices is a coming oversupply of LNG, caused by Europe's post-Ukraine invasion buying spree which priced out Global South importers, leading them to cancel infrastructure plans and creating a future supply-demand imbalance.
• Myth of De-industrialization: The normalization of energy prices is expected to put an end to the prevalent narrative that high energy costs are causing the permanent decline of German and European industry.
• Middle East Containment: A forecast that regional conflicts in the Middle East will remain contained and will not be a source of significant disruption or actionable news for global markets.
• Volatility Export Model: The concept that states like North Korea and Iran have a business model of exporting geopolitical volatility to gain concessions and international attention when they feel ignored.

Quotes

• At 0:28 - "I do think that President Trump will follow his banana and coffee example and he will lower tariffs on other goods... and I think the big forecast here is that tariffs on China are likely to come down." - Marko outlines his first major forecast for 2026, predicting a reversal of protectionist policies.
• At 0:47 - "So I would say that we reached peak de-globalization hysteria in 2025." - Marko summarizes his core thesis that the trend of increasing trade barriers will begin to recede.
• At 2:31 - "And I expect a doubling down on US tariffs on China." - Jacob offers a direct counter-forecast to Marko's, arguing US tariffs on China will intensify after the USMCA deal is secured.
• At 22:50 - "I've been wrong about Russia-Ukraine at every single step of the way. What I'm about to talk about, I've been right about every step of the way." - Jacob Shapiro sets up his confidence in his upcoming European energy forecast.
• At 23:22 - "I'm going to say that energy prices, especially for Germany...this is the year that energy prices for Europe start to normalize." - Jacob Shapiro makes his primary forecast that 2026 will mark the beginning of normalization for European energy prices.
• At 24:28 - "I think this whole narrative and myth about the de-industrialization of German supply chains and Eastern Europe and Central Europe, that goes away this year." - Jacob Shapiro explains the broader implication of his energy forecast on Europe's industrial outlook.
• At 25:52 - "When Russia invaded Ukraine...LNG prices shot through the roof as Europe started gobbling up every available cargo on the market. And that discouraged a lot of global South economies...from building import terminals." - Marko Papic explains the market mechanism behind the coming LNG glut.
• At 27:24 - "The view is what happens in the Middle East stays in the Middle East. It's irrelevant. Don't worry about it. It's fine." - Marko Papic presents his forecast that Middle East conflicts will not be a source of actionable news for global markets.
• At 53:48 - "Your livelihood is that you are a dude with nukes, you know? And then suddenly nobody cares...they're going to have to grab his attention." - Marko Papic describes North Korea's business model of exporting geopolitical volatility to gain concessions.

Takeaways

• Assess US-China trade policy with caution, as compelling arguments exist for both escalating protectionism and a strategic reduction in tariffs, making it a key point of global economic uncertainty.
• Recognize that market forces can create powerful counter-cyclical resolutions to geopolitical crises, as seen in the predicted LNG glut poised to solve Europe's energy issues.
• Understand that acute price shocks in one part of the global economy can suppress demand and infrastructure development in another, leading to delayed but significant supply-demand imbalances.
• Differentiate between headline-grabbing regional conflicts and events that have a material impact on global markets; not all geopolitical instability translates into market volatility.
• In your strategic planning, account for "spoiler" states whose geopolitical relevance depends on creating instability, as they can disrupt otherwise stable forecasts to command global attention.