IN THE LATE 1980s Edward Teller, the father of the hydrogen bomb, and Lowell Wood, an astrophysicist, proposed a seemingly bizarre scheme to defend America against missile attack. The “Brilliant Pebbles” system envisaged thousands of small satellites in low-Earth orbit, each housing heat-seeking missiles to take out incoming Soviet nukes long before they released their warheads. The idea faded, not least because the technology seemed distant. Now Donald Trump is resuscitating it.
On the campaign trail Mr Trump promised to build an “Iron Dome” for America, referring to an Israeli missile-defence system. The name is a misnomer. The Israeli system is designed to take out short-range rockets. What Mr Trump meant, and spelt out in an executive order published on January 27th, was a more ambitious effort to detect and counter intercontinental ballistic missiles (ICBMs) and the like. America already has a system designed to do that, known as Ground-Based Midcourse Defence (GMD), which relies on interceptors in Alaska and California.
Mr Trump’s proposal differs in important respects. One is its scope. GMD was intended to parry limited attacks involving a small number of ballistic missiles, such as might occur in an attack by North Korea. Mr Trump’s shield is supposed to block “any foreign aerial attack”, which would imply not only both cruise and ballistic missiles, but also a full-scale strategic attack by Russia or China involving many hundreds of missiles at once.
Critics of missile defence say this is folly, because it is generally cheaper to build additional offensive systems than interceptors to stop them. Russia and China—which are building missile shields of their own—have also argued that American defences risk undermining nuclear deterrence, because they might one day allow America to strike enemies without fearing retaliation. Advocates retort that the missile threat has changed: long-range non-nuclear missiles could now paralyse military facilities in the continental United States, allowing enemies to coerce America into staying out of a distant war.
In any case, Mr Trump’s favoured design is also noteworthy. GMD targets incoming missiles when they are in mid-flight. In theory it is easier to take out a missile in its “boost phase” (as it is taking off), when it is moving more slowly. The problem is that this is a fleeting moment—three to five minutes for ICBMs. The new order calls for “proliferated space-based interceptors capable of boost-phase intercept”. That amounts to a Brilliant Pebbles-like system: a lot of small, armed satellites, some of which would be above Russia, China and other foes at all times.
The cost of building tiny computers and putting thousands of them into orbit is far lower than it was in Mr Teller’s days—partly thanks to Elon Musk. But it is still eye-wateringly expensive, and liable to hoover up a good chunk of the defence budget. America would require 500 satellites in total to have just three to four interceptors in range of North Korean launchpads, estimates Bleddyn Bowen of Durham University; hundreds more than that would probably be needed, he says.
A key technical challenge will be building space sensors with “fire-control-quality tracking”—good enough at spotting and tracking enemy missiles to guide interceptors to them—says Tom Karako of CSIS, a think-tank. But if the technology proves mature, the implications could go beyond missile defence. “We will see the emergence, gradual understanding, and eventually acceptance of ‘space fires’,” says Mr Karako, which could include satellites capable of targeting, with both explosive and electronic means, targets on the ground, those in the air and other satellites in orbit.
There are many doubters. Mr Trump aired similar ideas in his first term but failed to back them with hard cash. Spending for an American Iron Dome will compete with a string of other priorities, from a bigger navy to more nuclear weapons. “It’s always a budget question,” says Mr Karako. “Show me your budget for missile defence, and I’ll tell you what your ‘Iron Dome for America’ is.” ■
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THE PENTAGON has been mired in chaos in recent months. Pete Hegseth, the secretary of defence, stands accused of mishandling classified information. Many of his aides have been let go over alleged leaks (accusations they deny). Top generals have been fired for no discernible reason beyond their colour or sex. The department is in “a full-blown meltdown”, says John Ullyot, a Hegseth loyalist who served as chief spokesman until April. Yet Mr Hegseth is pressing ahead with sweeping reforms that will change the size, shape and purpose of America’s armed forces.
BACK IN JANUARY Donald Trump signed executive order 14187, entitled “Protecting Children from Chemical and Surgical Mutilation”. He instructed federally run insurance programmes to exclude coverage of treatment related to gender transition for minors. The order aimed to stop institutions that receive federal grants from providing such treatments as well. Mr Trump also commissioned the Department of Health and Human Services (HHS) to publish, within 90 days, a review of literature on best practices regarding “identity-based confusion” among children. The ban on federal funding was later blocked by a judge, but the review was published on May 1st.
SHENZHEN, CHINA – APRIL 12: A woman checks her smartphone while walking past a busy intersection in front of a Sam’s Club membership store and a McDonald’s restaurant on April 12, 2025 in Shenzhen, China.
Cheng Xin | Getty Images News
As sky-high tariffs kill U.S. orders for Chinese goods, the country has been striving to help exporters divert sales to the domestic market — a move that threatens to drive the world’s second-largest economy into deeper deflation.
Local Chinese governments and major businesses have voiced support to help tariff-hit exporters redirect their products to the domestic market for sale. JD.com, Tencent and Douyin, TikTok’s sister app in China, are among the e-commerce giants promoting sales of these goods to Chinese consumers.
Sheng Qiuping, vice commerce minister, in a statement last month described China’s vast domestic market as a crucial buffer for exporters in weathering external shocks, urging local authorities to coordinate efforts in stabilizing exports and boosting consumption.
“The side effect is a ferocious price war among Chinese firms,” said Yingke Zhou, senior China economist at Barclays Bank.
JD.com, for instance, has pledged 200 billion yuan ($28 billion) to help exporters and has set up a dedicated section on its platform for goods originally intended for U.S. buyers, with discounts of up to 55%.
An influx of discounted goods intended for the U.S. market would also erode companies’ profitability, which in turn would weigh on employment, Zhou said. Uncertain job prospects and worries over income stability have already been contributing to weak consumer demand.
After hovering just above zero in 2023 and 2024, the consumer price index slipped into negative territory, declining for two straight months in February and March. The producer price index fell for a 29th consecutive month in March, down 2.5% from a year earlier, to clock its steepest decline in four months.
As the trade war knocks down export orders, deflation in China’s wholesale prices will likely deepen to 2.8% in April, from 2.5% in March, according to a team of economists at Morgan Stanley. “We believe the tariff impact will be the most acute this quarter, as many exporters have halted their production and shipments to the U.S.”
“Prices will need to fall for domestic and other foreign buyers to help absorb the excess supply left behind by U.S. importers,” Shan said, adding that manufacturing capacity may not adjust quickly to “sudden tariff increases,” likely worsening the overcapacity issues in some industries.
Goldman projects China’s real gross domestic product to grow just 4.0% this year, even as Chinese authorities have set the growth target for 2025 at “around 5%.”
Survival game
U.S. President Donald Trump ratcheted up tariffs on imported Chinese goods to 145% this year, the highest level in a century, prompting Beijing to retaliate with additional levies of 125%. Tariffs at such prohibitive levels have severely hit trade between the two countries.
The concerted efforts from Beijing to help exporters offload goods impacted by U.S. tariffs may not be anything more than a stopgap measure, said Shen Meng, director at Beijing-based boutique investment bank Chanson & Co.
The loss of access to the U.S. market has deepened strains on Chinese exporters, piling onto weak domestic demand, intensifying price wars, razor-thin margins, payment delays and high return rates.
“For exporters that were able to charge higher prices from American consumers, selling in China’s domestic market is merely a way to clear unsold inventory and ease short-term cash-flow pressure,” Shen said: “There is little room for profits.”
The squeezed margins may force some exporting companies to close shop, while others might opt to operate at a loss, just to keep factories from sitting idle, Shen said.
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As more firms shut down or scale back operations, the fallout will spill into the labor market. Goldman Sachs’ Shan estimates that 16 million jobs, over 2% of China’s labor force, are involved in the production of U.S.-bound goods.
The Trump administration last week ended the “de minimis” exemptions that had allowed Chinese e-commerce firms like Shein and Temu to ship low-value parcels into the U.S. without paying tariffs.
“The removal of the de minimis rule and declining cashflow are pushing many small and medium-sized enterprises toward insolvency,” said Wang Dan, China director at political risk consultancy firm Eurasia Group, warning that job losses are mounting in export-reliant regions.
She estimates the urban unemployment rate to reach an average 5.7% this year, above the official 5.5% target, Wang said.
Beijing holds stimulus firepower
Surging exports in the past few years have helped China offset the drag from a property slump that has hit investment and consumer spending, strained government finances and the banking sector.
The property-sector ills, coupled with the prohibitive U.S. tariffs, mean “the economy is set to face two major drags simultaneously,” Ting Lu, chief China economist at Nomura, said in a recent note, warning that the risk is a “worse-than-expected demand shock.”
Despite the mounting calls for more robust stimulus, many economists believe Beijing will likely wait to see concrete signs of economic deterioration before it exercises fiscal firepower.
“Authorities do not view deflation as a crisis, instead, [they are] framing low prices as a buffer to support household savings during a period of economic transition,” Eurasia Group’s Wang said.
When asked about the potential impact of increased competition within China’s market, Peking University professor Justin Yifu Lin said Beijing can use fiscal, monetary and other targeted policies to boost purchasing power.
“The challenge the U.S. faces is larger than China’s,” he told reporters on April 21 in Mandarin, translated by CNBC. Lin is dean of the Institute of New Structural Economics.
He expects the current tariff situation would be resolved soon, but did not share a specific timeframe. While China retains production capabilities, Lin said it would take at least a year or two for the U.S. to reshore manufacturing, meaning American consumers would be hit by higher prices in the interim.