As @
Koprulu Mustafa Pasha said, the specific scenario is somewhat unrealistic. But if it happened — and less plausible things have — the result would be catastrophic.
Most Turks in eastern and central Anatolia had strong Aliid sympathies. Battlefield defeat and Selim’s death would prove to the majority of Anatolia that Ismail I really was the Mahdi reincarnate and lead to widespread rebellion in the area and sweeping Safavid advances. Ismail would almost certainly reach Konya, if not further west.
Thankfully, Selim’s heir was always Süleiman, so there would be a strong and relatively uncontested ruler at the helm of the empire to thwart the Safavids.
But the damage would very possibly be lasting. Retaking eastern Anatolia might be daunting given the terrain and the hardiness of its people. The Ottoman conquest of the Mamluks was somewhat of a fluke and probably won’t be replicated, especially since a defeat at Çaldiran would mean that Ottoman supply lines into Syria are extremely tenuous.
The Middle Eastern balance of power might then be tripartite, with two powerful empires (the Ottomans with an Aegean center of power and the Safavids with a core in the Iranian Plateau) contesting hegemony over a weak Egyptian state.