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Europe braces for the impact of US auto tariffs, Israel’s defense industry grows, and “China’s Frank͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
 
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March 28, 2025
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The World Today

  1. Europe braces for auto tariffs
  2. EU split on Ukraine security
  3. Europe rethinks F-35 reliance
  4. China courts US allies
  5. Israel arms buildout
  6. CoreWeave scales back IPO
  7. Wall St.’s Trump hopes fade
  8. US health spending cuts
  9. China’s richest person
  10. Controversial gene editor

A mysterious coin collector’s buried treasure is going up for auction.

1

Auto tariffs painful for Europe

Europe is bracing to be hit particularly hard by US President Donald Trump’s 25% tariffs on auto imports, set to go into effect next week. Porsche and Mercedes-Benz could face losses equivalent to a quarter of their projected 2026 earnings, Bloomberg reported, threatening Germany’s reliance on US exports at a time of broader optimism over the country’s economic trajectory. Italy’s Ferrari said it will raise prices on some models by 10% to offset the new duties. The European car industry has struggled to stay competitive globally, especially against Chinese rivals: A recent McKinsey report found European companies take up to four years to launch a new car, while Chinese firms can do it in 21 months.

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2

Europe divided over Kyiv security

French president Emmanuel Macron, UK Prime Minister Keir Starmer, and Ukrainian president Volodymyr Zelenskyy.
Ludovic Marin/Pool via Reuters

French President Emmanuel Macron announced a plan for some European countries to send “reassurance forces” to Ukraine in the event of a ceasefire with Russia, but the continent remains divided on security guarantees for Kyiv. Macron acknowledged that support for the idea — discussed at a Paris summit of the so-called “coalition of the willing” on Thursday — was “not unanimous,” and the scarcity of details only “compounded a sense of murkiness” around diplomatic efforts to stop the war, The New York Times wrote. Russia opposes European forces in Ukraine, and top US officials have dismissed the idea. Europe needs a “complete strategic reboot,” veteran Singapore diplomat Kishore Mahbubani argued, whereby its leaders need to consider “unthinkable” options like engaging with Moscow.

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3

US allies rethink F-35 dependence

An F-35 lands on the deck of an aircraft carrier.
Marco Garcia/Reuters

President Donald Trump’s attacks on NATO may hit the US defense industry. The F-35 fighter jet — the biggest revenue generator for US defense group Lockheed Martin — is operated by 19 non-US countries, but Trump’s suggestion of selling “toned down” jets to allies in the future because “someday, maybe they’re not our allies,” raised concerns that the US could abruptly immobilize non-US F-35s remotely. The Pentagon has denied having such a capability, but several nations have signaled interest in other options, like the Eurofighter Typhoon. “Politics could damage our prospects,” one US defense industry executive told the Financial Times, although it will be difficult for existing customers to opt out of future purchases.

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4

China’s carrot-and-stick strategy

A military officer stands guard at the open space in front of the Great Hall of the People.
Go Nakamura/Reuters

China aims to exploit US President Donald Trump’s upheaval of the global order, several analysts said. Beijing is holding talks this weekend with US allies Japan and South Korea on a potential free trade agreement, following a meeting of their foreign ministers last week. “As countries hedge against potential US retrenchment, Beijing stands ready to present itself as a dependable partner,” China expert Jude Blanchette wrote in Foreign Affairs. But even as Beijing courts Washington’s Asia-Pacific partners, it uses aggressive tactics like military drills and naval incursions to warn those that threaten China’s interests — essentially a “carrots and sticks” approach, expert Bonnie Glaser said.

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5

Israel aims to ramp up arms exports

A chart showing Israel’s arms imports and exports, as reflected by SIPRI’s TIV figures.

Israel’s domestic defense industry is expanding thanks to Western restrictions on its military exports over the war in Gaza. As Europe ups its defense spending in the face of Russian threats, Israeli arms manufacturers are aiming to increase exports, potentially attracting some countries that had imposed weapons embargoes, Bloomberg reported. “The first question every government asks before buying from Israel is: Does the IDF use this?” a former Israeli defense official said. The country’s economy has taken a hit during the war, but technological innovations, like advanced drone interception and plane-based laser defense systems, offer new avenues for export-driven growth, analysts said.

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Semafor Exclusive
6

CoreWeave downsizing its IPO

US artificial intelligence cloud-computing company CoreWeave plans to downsize its ambitious IPO and cut the share price, a poor sign for a listing seen as a test of whether AI startups are ready for the public markets. The move, first reported by Semafor, is a setback for AI and for hopes of a broader revival in the IPO market. It comes amid a tough backdrop: Tech stocks have lagged other sectors in recent weeks, and hedge funds have been pummeled. Silicon Valley is all-in on AI, but to the stock market, the technology “is still kind of a head-scratcher,” Semafor’s Reed Albergotti wrote in his Tech newsletter.

For more Wall Street scoops and analysis, subscribe to Semafor Business. →

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7

Trump euphoria fading on Wall St.

Televisions broadcast financial news near the trading floor.
Mike Segar/Reuters

US stocks fell for a second straight day Thursday, the latest sign that Wall Street’s high hopes for the second Donald Trump administration appear to be fading. Trump heralded a “golden age” when he returned to power in January, and markets seemed to agree: The S&P 500 hit an all-time high in February. But his on-again-off-again tariff policies have seen confidence fall. A promised pro-growth agenda “has gone in reverse,” one analyst told The Wall Street Journal. Another bemoaned “a brew of sticky inflation, slowing growth and austerity.” Even hopes that Trump would usher in an era of easier deals has not materialized. Mergers and acquisitions are “essentially on hold,” Bloomberg reported, with the uncertainty spooking would-be dealmakers.

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8

Mass layoffs at US health department

US President Donald Trump meets with Attorney General Pam Bondi, Health Secretary Robert F. Kennedy, Jr., and Secretary of Education Linda McMahon.
Carlos Barria/Reuters

The US health department plans to axe 10,000 employees, part of the Trump administration’s widespread cuts that critics say will undermine American and global public health efforts. The downsizing is part of a broader reorganization by Health Secretary Robert F. Kennedy Jr., a noted vaccine skeptic. The administration has slashed $12 billion in grants to states for infectious disease tracking among other services, and health agencies are canceling funding for COVID-related research. The future of the renowned HIV-fighting PEPFAR program is uncertain, and the White House plans to end support for an organization that helps buy vaccines for children in developing countries. “This is not just a bureaucratic decision,” Sierra Leone’s health minister said. “There are children’s lives at stake.”

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9

China’s new richest person

A chart listing nine of China’s wealthiest people.

The founder of TikTok’s parent company ByteDance became China’s wealthiest person on Thursday. Zhang Yiming has a $57.5 billion fortune, and at 41, he differs “from the previous generations of ‘made in China’ billionaires because the business is more innovative and global-oriented,” a Beijing-based expert told Bloomberg. ByteDance has become an artificial intelligence pioneer and, through TikTok, an international juggernaut. But Zhang’s new superlative is a “dubious honor,” Semafor’s Rohan Goswami argued: Beijing has a complicated relationship with its wealthiest entrepreneurs, and TikTok remains caught in geopolitical crosshairs. US President Donald Trump this week floated relaxing tariffs on China if the country supports the app’s sale to a US-backed owner.

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10

Controversial Chinese scientist is back

Controversial scientist He Jiankui
Oriental Image via Reuters

A Chinese scientist who was imprisoned after purportedly creating the world’s first genetically modified babies is plotting a comeback. He Jiankui was ostracized by the Chinese and global scientific communities and dubbed “China’s Frankenstein” after claiming in 2018 that he engineered twin girls to be resistant to HIV. After serving jail time in China for illegally practicing medicine, He is now trying to use gene editing to prevent Alzheimer’s disease, The Wall Street Journal reported. Gene editing embryos is highly controversial and not condoned by any country, so Beijing’s attitude to He’s return to research will be closely watched: China has pushed to become a global science leader, and its biotech industry has ballooned.

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Flagging

March 28:

  • Canada and the UK publish GDP estimates.
  • Campaigning begins in the Philippines’ midterm elections.
  • Nobel Prize-winning Peruvian novelist Mario Vargas Llosa celebrates his 89th birthday.
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Substack Rojak

Rojak  is a colloquial Malay word for “eclectic mix,” and is the name for a Javanese dish that typically combines sliced fruit and vegetables with a spicy dressing.

What you seek is what you get

The US hysteria over the sudden ascendance of Chinese artificial intelligence startup DeepSeek reveals more about American anxieties than Chinese reality. DeepSeek immediately became a geopolitical bogeyman as US investors feared China was making advanced AI models at a fraction of the cost of American ones, while OpenAI called for the US to ban the “state-controlled” startup. But “American AI nationalism appears even more direct and exaggerated than China’s version,” the Concurrent newsletter, about Chinese tech and culture, argued.

The US shock, awe, and alarm over DeepSeek reflects how the West often mischaracterizes the distinctively Chinese approach to technological development: The state doesn’t so much directly control tech, but orchestrates and endorses it in a way that “creates powerful connections,” Concurrent wrote, as exemplified by DeepSeek’s recent integration with tech giant Tencent. The US reaction, then, underscores how China “functions as a mirror” for the West: “China has become the screen onto which Americans of all stripes… project their anxieties and aspirations.”

Bye bye, kawaii

This year marks a decade since a shift in Japan’s cultural image transformed music, fashion, and tourism. In the early 2010s, “kawaii” — meaning “cute” — was the word that defined Japan on the world stage. Tokyo’s Harajuku area embodied the adorable aesthetic that was adopted by American pop stars like Gwen Stefani and Lady Gaga, becoming a huge tourist draw.

Tokyo-based writer Patrick St. Michel pointed to 2015 as the year that Japan’s global image began to move away from kawaii: “The hyper cute idea gave way to ‘calm Japan,’” St. Michel wrote in his newsletter Make Believe Mailer, focused on Japanese music. Organizing consultant Marie Kondo and the reality show Terrace House are prime examples of the more subdued Japanese aesthetic, which prioritizes neatness and serenity. And playful and bright music that defined the kawaii era “would fade as J-pop inched towards something darker for the next decade.”

Glazed and confused

Donuts are the latest treat to be ensnared in the complex Indian bureaucracy. Earlier this year, India’s tax officials came under fire for their three-tiered system for taxing different types of popcorn. Now, a tax dispute is playing out over whether donuts are classified as a restaurant dish or a bakery good. The government argues that delicacies sold by an Indian donut chain constitute a bakery product — because they are prepared in a central kitchen and only garnished and dipped in chocolate before being sold — and therefore should be taxed at a higher rate. The company says it should be taxed at a lower rate as a “restaurant service” because it does much more than just putting finishing touches.

A legal back-and-forth over a dessert seems silly, but “it’s a first-of-its-kind case that could have far-reaching implications” for both bakeries and restaurants, the progressive think tank Bridge India wrote in its newsletter.

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Curio
Magnentius coins, 350 – 353
Magnentius, 350 – 353. Numismatica Ars Classica

A mysterious coin connoisseur’s vast collection worth more than $100 million will be auctioned starting May. Dubbed “The Traveller,” the Europe-based collector buried more than 10,000 gold and silver coins — stuffed in envelopes contained in cigar boxes — in his garden, over fears of a Nazi invasion of Europe. They remained hidden for more than 50 years, until his widow called in specialists to evaluate the collection. The coins were only revealed to auctioneers in 2022, and sifting through them “was like going to a candy store every day,” one auctioneer told the Financial Times. The enigma of “The Traveller” endures, he said: Coin collectors “are often private and reserved, as well as meditative, knowledgeable and very competent.”

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Semafor Spotlight
Texas Rep. Jasmine Crockett at a Biden-Harris event.
Gage Skidmore/Creative Commons

Texas Rep. Jasmine Crockett called her state’s wheelchair-bound Republican governor “Hot Wheels” during a fundraising dinner — a comment that the GOP is amplifying in their bid to cast the Democrat as “a one-woman left-leaning gaffe machine,” Semafor’s David Weigel and Kadia Goba reported.

Republicans are working to neutralize Democrats’ strategy to build opposition around Elon Musk and DOGE, by linking attacks on Tesla cars — what they label as “terrorism” — with anti-Musk figures like Crockett. Depending on how she handles the fallout from her recent comment, Crockett might be flirting with a new, riskier level of stardom.

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