The hostage deal is only the first swallow: what Donald Trump is hiding up his sleeve

A day after the release of the first three hostages on the 471st day of the Iron Swords War, the 47th President of the United States was sworn in. Donald Trump In the 250th year of US independence. Tremendous pressure to reach an agreement was placed on the Prime Minister Benjamin Netanyahu by Trump’s special envoy to the Middle East Steve Witkoff. Netanyahu aligned himself and agreed to a plan to trickle in hostages – with the possibility of ending the war. Trump mentioned their release in his inauguration speech, and even met with previously released abductees. The new president acts quickly, and issues presidential orders accordingly. Below we will examine their results in the American and international arena.

inflation. The price increases recorded during the president’s term Joe Biden worries Trump, who announced at his inauguration that he will fight inflation with all his might for the benefit of the American citizen – and will also make sure that he finds employment. The main means of fighting inflation is by removing oil and gas drilling restrictions, which were limited by Biden due to the demand of the left wing in his party to aim for a greener economy. Trump estimates that the removal of regulatory restrictions on the production of oil and gas in the soil and in the depths of the sea of ​​the American territories will cause a decrease in energy prices and thus will contribute to a significant decrease in prices in all areas of life – from the prices of goods to services in the USA.

The topic of oil and gas prices is very popular in American culture. Not only that, Trump promises that the Americans will produce oil and gas in such large quantities during the years of his presidency, so that the export of gas and oil from the US will always be substantial. In Trump’s first term, there were years when the US was a net exporter of oil. Europe will have to increase the purchase of gas from the US, and even oil later, within the framework of Trump’s vision that Europe’s trade account with the US owes about 214 billion dollars in the first 11 months of 2024 after 209 billion dollars in 2023. The threat of Trump is imposing tariffs on imports from Europe.

Trump is first and foremost a businessman and real estate man. Tariffs on the rest of the world will rise according to the negotiations, but on China it is intended to impose tariffs of 60%. The imposition of higher protective tariffs is also intended to fill the treasury’s deficit coffers, so Trump clearly says. Europe will be asked to comply with NATO’s conditions and reach a budgetary expenditure for defense in the amount of 2% of GDP. Germany, after dragging its feet for at least eight years, reached this in 2024. The increase in the defense budget in Europe due to the blowing of the Russian bear in the rear, will lead to the purchase of more American equipment and weapons to meet the goal – another step towards reducing the US trade deficit with Europe.

a factory The USA will return and be a country with an advanced industry, and also a powerhouse in the field of vehicles manufactured by Americans and for Americans. Everyone will be able to choose a vehicle to their heart’s content, Trump promised. With energy sources that will increase, there is no reason why the renewed American industrialization will not fill the vacuum of imports from the countries of the world, which are only taking advantage of the openness of the USA. The reduction of the corporate tax, cheaper energy and protective tariffs on imports to the USA will allow the American industry to be the object of global envy. The new administration will push for excellence, and the new president has pledged to protect American workers from foreign imports that harm their livelihoods.

immigration. President Trump intends to immediately send military forces to protect the southern border of the USA. He also intends to get rid of millions of illegal immigrants who have crossed the border into the US in recent years. In his inauguration speech, Trump clearly announced that he will deport illegal immigrants, one and the same. Trump also intends to change the entire immigration policy to the US. He plans to protect US cities from unwanted foreign protesters and students.

According to Trump’s vision, the American government must protect its citizens, and all the enemies of the USA will be removed from its land. The economic and economic meaning is less cheap working hands in the American market, especially in the agriculture and construction industries, which will require more automation and more robotics, until they replace the cheap hands of those who will be thrown across the border. The cost of labor will rise and negatively affect prices in the US – that is, an inflationary result.

Defense, security and space. Trump is a businessman, this time dressed as a president. He stated at the inauguration that he wants world peace, not wars. His business approach over the years has been that wars are a waste of resources and that it is better to make peace and earn money than to fight and waste it. It is true that the defense budget will increase, but only to protect the US from its enemies who were defeated in both world wars and then in other wars, Trump mentioned.

The large defense budget can be beneficial for more global peace in all areas, especially if agreements are reached to end the conflicts between Ukraine and Russia and in the Middle East. The new-old president stated that the USA aims to place the stars and stripes flag on the planet Mars. Saying these things at the inauguration ceremony, Elon Musk – who aspires to do this through his space company SpaceX – had a wide smile on his face.

the interest rate. The vectors are so fundamental to inflation that it is difficult to predict its direction. What is clear is that the Fed, which is the US central bank, will closely follow Trump’s actions to examine the inflationary or deflationary effect resulting from his actions in order to decide on interest rates. This point is very important not only for the USA but for the entire world: the interest rates of most developed economies are indirectly derived from the American interest rate, with the possible exception of Japan.

Trump seeks to streamline the clumsy and inefficient government system of the United States through an office he established and headed by Elon Musk and-Vivek Ramaswamy hoping to bring trillions of dollars in savings. Offices will be closed, departments will be reduced, waste will be blocked. These savings, Trump hopes, along with an increase in American economic activity, will be combined with the reduction of the corporate tax to 15%. In parentheses, we note that the International Monetary Fund predicts a growth of 2.7% for the USA already this year compared to 1% in the Eurozone – of which only 0.3% in Germany, the former economic engine of Europe.

Before us, therefore, are several contradictory steps in the direction of inflation in the US: cheap energy prices reduce inflation, on the other hand, tariffs raise prices in the American domestic market due to a decrease in the competition of goods from abroad. Reducing taxes leads to an increase in the budget deficit and attracts an increase in inflation, and on the other hand streamlining the mechanism of the federal government can contribute to a decrease in the deficit. From all that has been said, it follows that inflation will continue to be high both in the eyes of the Fed and in the eyes of businesses in the US and around the world.

world trade. It will be affected by the tariffs that President Trump will impose on most countries of the world. World trade increased in 2024 by 2.7%, and for 2025 the estimate was for the world to emerge from the economic slowdown and for an increase in world trade by 3.3% (according to data from the World Trade Organization). But the forecast changed after the election of Trump, who stated that he would not tolerate exploitation of the US against countries that do not advocate reciprocity – that is, they do not buy and purchase from the US.
The World Trade Organization reduced this year’s growth forecast to an increase of only 3% – a fundamental change. The organization first built the forecast on the fact that the interest rate, which began to decrease in the world in 2024 following the interest rate reductions in the USA, will lead to an increase in private consumption in the world, and in general in the overall public consumption, which will result in an increase in the volume of world trade. President Trump came and spoiled the optimistic forecast.

World trade will flourish in Asia at a rate of 4%, while in Europe, the continent that is weakening and heading for an economic recession with minimal and zero growth, trade will increase this year by only 1.1%. It is no wonder that the prices of sea transportation in the world plummeted in the week before Trump’s inauguration.

Perhaps we can see a bright spot regarding world trade in that the US intends to regain control of the Panama Canal, which it built at a heavy cost in capital and lives until the president Jimmy Carter He transferred it to Panama at the end of 1999. Trump seeks to prevent the entry of China or Chinese management of the canal, which harms the independence of American trade. Even before the transfer of control to Panama, a Chinese company negotiated to manage ports along the canal for a period of 25 years.

Israel. The American defense budget will increase, and Israel’s defense spending will be able to rise at a rate that is easier than we expected. Past studies have demonstrated an inverse relationship between the American and Israeli defense budgets. The new American administration will not prevent Israel from arming itself as it pleases – as long as we ask for peace. The global trade war that Trump will launch will not harm Israel, and in fact it can export to the US at will, unlike the rest of the world.

Flooding the world with American gas can damage the viability of laying additional infrastructure for gas exports from Israel to Europe, which at best is a continent in retreat. Too high an interest rate in the US, if there is one, will force the Bank of Israel to leave the interest rate high for a longer period of time, and vice versa.

All in all, Trump’s entry into the White House is good for Israel, which will be forced to reach a settlement with the Palestinians – perhaps in the second half of his term. Until then there will be elections in Israel and a new government, which will have to deal with the demands of the American administration regarding a wider control of the Palestinians over their lives. At least according to the last few weeks, it is quite possible that the hostage deal is the first sign of American influence and that the elections in Israel may come sooner than the release of the hostages and the end of the war.