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DeepSeek’s AI breakthrough has exposed the limits of Trump’s tariffs. It is challenging Washington’s ability to restrain China’s technological rise.This is the opinion of Nigel Green, CEO of global financial advisory and asset management giant, deVere Group.
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The Chinese artificial intelligence startup has developed a cost-effective AI model. It operates on less-advanced chips, proving that innovation can outmanoeuvre trade restrictions.
For years, the Trump administration deployed tariffs as a tool to curb Beijing’s progress, Tariff is used protect US dominance, particularly in key industries like semiconductors and AI. DeepSeek’s success suggests that strategy is losing its edge.
Nigel Green says, “This is a wake-up call for markets. The assumption that tariffs could contain China’s technological ambitions is being dismantled in real time.
“DeepSeek’s breakthrough is proof that innovation will always find a way forward, regardless of economic barriers.”
He continues: “By restricting China’s access to high-end semiconductors, Washington sought to slow its progress in AI. Instead, it has fueled an acceleration in domestic innovation, forcing Chinese firms to find alternatives. DeepSeek’s achievement is a direct result of this shift.
“Rather than being crippled by US sanctions, Beijing has cultivated AI models that require significantly less computing power, diminishing its reliance on American technology and eroding US leverage over global supply chains.”
Markets already reacting to lower demand for high-end chips
Markets are already reacting. US semiconductor stocks are under pressure as investors digest the implications of a future where demand for high-end chips could weaken. European tech stocks are also sliding, reflecting broader uncertainty about whether Silicon Valley can maintain its grip on AI’s future.
The Nasdaq 100 has felt the impact, and fears are growing that US trade policies may be pushing competitors toward self-sufficiency faster than anticipated.
Nigel Green notes: “Investors should be paying close attention to this shift. If China’s AI firms no longer require cutting-edge US chips, a core pillar of Washington’s strategy crumbles.
“The market response we’re seeing is just the beginning of what could be a larger recalibration of AI investment flows.”
Trump has not yet introduced new tariffs, but with his campaign rhetoric centered on economic nationalism, they remain a looming threat. If he returns to the White House, a fresh wave of tariffs on China is likely.
DeepSeek’s breakthrough raises questions about Trump tariff
DeepSeek’s breakthrough raises urgent questions about whether such measures will be effective in a world where technological agility is increasingly outpacing economic restrictions.
“For US policymakers, this moment demands a reassessment. Tariffs once served as a blunt instrument to enforce trade priorities, but their effectiveness is waning. If China can continue to develop advanced AI capabilities without access to cutting-edge US semiconductors, Washington’s economic arsenal will look increasingly outdated,” says the deVere CEO.
The challenge is no longer just containing China—it is ensuring that America remains at the forefront of global innovation. That requires investment in research, a more robust industrial strategy, and policies that incentivize domestic breakthroughs rather than relying on punitive measures against competitors.
“DeepSeek’s rise is not just a milestone for China—it is a warning for the US,” concludes Nigel Green.
“Tariffs may have worked in an earlier era, but in today’s world, economic power is determined by who innovates the fastest. If Washington keeps relying on restrictions instead of pushing ahead at home, it risks being left behind.”
