DeepSeek and Trump Tariffs: Navigating China’s Market Landscape

As investors return to mainland China’s markets following an eight-day Lunar New Year celebration, they face a mix of opportunities and challenges. The emergence of the Chinese artificial intelligence (AI) startup DeepSeek is creating excitement, while the ongoing impact of U.S. tariffs on Chinese goods casts uncertainty over market performance.

Strained relations between the U.S. and China continue to cloud the market outlook. Analysts suggest that technology companies focusing on AI will benefit from DeepSeek’s breakthroughs. Recently, DeepSeek launched two powerful large language models that have shown performance comparable to the renowned ChatGPT developed by OpenAI. Despite this potential surge in investor interest in the tech sector, companies in export-oriented fields such as textiles, home appliances, electronics, and chemicals could struggle, according to market analysts.

With the financial landscape changing rapidly, many investors may choose to observe rather than engage as they wait for the results of a crucial call between U.S. President Donald Trump and Chinese President Xi Jinping. This meeting is seen as critical, as it holds the potential to reduce the risk of a trade war between the two largest economies in the world.

“While technology firms associated with DeepSeek will likely receive a warm welcome from investors, it may not be enough to catalyze a strong overall market opening,” commented Ivan Li, a fund manager at Loyal Wealth Management in Shanghai.

Recently, President Trump’s administration enacted a 10 percent tariff on several Chinese exports, to which Beijing retaliated by imposing tariffs of 15 percent on U.S. coal and liquefied natural gas and 10 percent on crude oil, agricultural machinery, high-emission vehicles, and pickup trucks.

As the Year of the Snake unfolds, investors will surely keep a close watch on these developments, especially the outcomes of the anticipated Trump-Xi talks. The balance of power in China's markets appears to hinge on the interplay between domestic innovation, like that seen from DeepSeek, and the broader international trading environment.

DeepSeek, Trump, Tariffs