“While the United States is chasing the ghosts of manual labour in mines and factories, China has already turned these areas into an arena of robots and artificial intelligence,” warns Cornel Ban, an associate professor at Copenhagen Business School and a researcher at the Centre for Global Development Policy at Boston University. His words are like a lightning strike that cuts through illusions about where the world is headed in 2025. The economic war declared by Donald Trump on 2 April under the loud name of “Liberation Day” challenges not only China or Europe, but also the very foundation of globalisation, a system that America once built with titanic confidence. Israel, despite its long-standing friendship with the United States, is also under attack, and this makes us wonder: where is the world headed and how can we adapt?
Tariff cataclysm: a global rift and a blow to Israel
Trump’s tariffs are not just an economic manoeuvre, but a historic rift that Ban calls “shock therapy for global trade”. Double the size of what markets had expected, they hit everything from Chinese technology (60%) to European cars (20%), from Indian exports to the struggling economy of Laos. Israel, which had hoped for leniency due to its strong ties with the US, received an unexpected slap on the wrist: A 17% duty on imports ranging from medical equipment to kosher food. “It was Washington, not Beijing or Brussels, that turned the globalisation wheel. And it is Washington that is now throwing sand in its gears,” Ban says with cold clarity, reminding us that the US, which for decades has been the hegemon of the free market, is now destroying its foundations.
Why did this happen? The answer lies in America’s deep wounds: the decline of industrial regions has left social wastelands, and the disturbing realisation that China – which the US had considered to be just a “global factory of cheap trinkets” – has become a technological titan has forced Washington to act. Thomas Friedman, the author of the iconic “Planet Flat” (2005), writes with bitter irony in his essay in the New York Times of 3 April 2025: “I have seen the future, and it is not in America.” He describes Huawei’s campus, a state-of-the-art centre where China does not copy, but creates: from its own chips to operating systems. “Trump is accelerating China’s technological rise, not holding it back,” Friedman adds, his words sounding like a sentence.
Europe is holding on, America is cracking, China is advancing
While the United States is immersed in nostalgia for the past, Europe, according to Ban, “with all its flaws, has adapted to globalisation and the rise of China much better.” The EU has retained its industrial potential, avoiding social catastrophes like the American deindustrialisation, which resembles the post-Soviet ruins. China is investing in niche research – from pharmaceuticals to decarbonisation – while Trump is cutting government funding for such projects in the US, as if deliberately clipping the wings of his own innovations. “I worked in the US research system for 16 years – it’s a jewel. But China has made a huge leap,” Ban admits, with a touch of admiration and concern.
The economic consequences are already being felt. Apple, whose supply chains are firmly entwined in China, India and Vietnam, lost $250 billion on the stock exchange, a sum that sounds like a funeral bell. The US auto industry, which imports half of its components, is facing a price shock that threatens to paralyse the industry. “How will the US industry cope with such a blow over the next two years?” asks Ban rhetorically, hinting that the “Great Recovery” could turn into an American tragedy.
Israel under attack: economic consequences
For Israel, which cancelled all tariffs on US goods on 1 April, hoping for reciprocity, the 17% duty was a cold shower. “This is a regression in trade relations between the two countries, given their long-standing friendship,” said Ron Tomer, president of the Israeli Manufacturers Association. Economists estimate losses at $3 billion, or 0.6% of GDP, which could hit key industries, including medical equipment and agricultural exports. Gifthead’s Inbal Haresh notes: “Israeli companies, especially in the industrial sector, are moving into a cautious wait-and-see mode, freezing non-critical hiring and developing contingency plans.” Marom’s Nimrod Zwick adds: “The construction sector, which has been active in the US, has been hit, with projects that were once profitable becoming unprofitable.” However, Exelera’s Tom Koren remains calm: “Exporters have already taken the risks into account, so there will be no radical changes.”
Trump’s bet: an epoch-making gambit or a fatal mistake?
The Trump administration is relying on three pillars: the tariffs will bring in $600 billion to the budget, these funds will offset inflation through tax cuts, and European and Asian industries will move to the US en masse to avoid the duties. “It’s a heroic plan, but unprecedented in history,” Ban comments with cold irony. But will it work? European and Asian companies that have tried to open factories in the US under Biden have complained of a lack of skilled workers and legal instability – painful realities that dash dreams of an industrial renaissance. The revival of American industry two years before the midterm elections looks like a fantasy worthy of a Hollywood script.
Worse, if inflation explodes – and it is already lurking around the corner – the Federal Reserve could raise rates, driving the economy into recession. “Then there will be a war between the White House and the Fed that we didn’t even see in Trump’s first term,” Ban predicts, and his words sound like a prophecy.
Who will lose the most?
The first casualties are already on the surface, and the list is impressive. American automakers, tech giants facing European counter-tariffs, and ordinary consumers who will pay more for everything from their morning coffee to the latest gadgets. India, whose prosperity has grown through integration with the United States, has been dealt a “terrible blow” that threatens to undermine its economic progress. The countries of the Global South, which for decades have been caving in to Western pressure on their own tariffs, now face a wall of American protectionism. “They feel cheated,” Ban says, with a touch of sympathy.
Israel, despite the blow, has a chance to find a way out through agreements with the EU, but the construction sector is already feeling the chill. Europe is bracing itself for pain in key sectors: pharmaceuticals, automotive, chemicals – all under attack. But Ban also sees a light at the end of the tunnel: “If the US doesn’t back down, the EU will create its own tech giants, just like China did.”
Is globalisation dead?
Calling it the “death of world trade” is an exaggeration, Ban says with philosophical calm. “Free-market policies are under attack, but I expect the US to calibrate the consequences.” Perhaps a grand bargain with China or a compromise with allies will be struck – a scenario that could still save the day. But the main problem is the loss of trust, which has become toxic. For the first time, Trump’s tariffs have forced China and Japan, historical antagonists, to build a common trade strategy – an alliance that seemed impossible. “It’s amazing,” Ban marvels, his voice tinged with admiration.
Epilogue: a new world on the horizon
The “Day of Liberation” is not just an American experiment, but a moment of truth for the world that exposed its fissures. China, which has not yet unlocked its domestic consumption potential, could become a new Mecca for European and Japanese exporters, replacing the US as the main market. Europe, despite its vulnerability, has a chance to become a guarantor of global trade with China, building a new architecture of relations. For Israel, this is a time for strategic rethinking: can we use our agreements with the EU and find new markets to soften the blow? And the United States? “There is a price to be paid for being a hegemon,” Ban concludes with philosophical depth, “and America doesn’t seem to want to do that anymore.
The world that Friedman described in Flat Planet is coming apart at the seams, like an old map torn apart by new borders. But whether it falls apart completely or finds a new balance depends on how quickly we, including Israel, adapt to this tariff earthquake. Everything is in our hands – and time is running out inexorably.
Author : Aleksandr Potetiuiev
