DeepSeek’s AI breakthrough has exposed the limits of US president Donald Trump’s tariffs, challenging Washington’s ability to restrain China’s technological rise.
This is the opinion of Nigel Green CEO of deVere Group, who points out that the Trump administration has deployed tariffs as a tool to curb Beijing’s progress and protect US dominance, particularly in key industries like semiconductors and AI.
DeepSeek’s success suggests that strategy is losing its edge, he says.
The Chinese artificial intelligence startup has developed a cost-effective AI model that operates on less-advanced chips, proving that innovation can outmanoeuvre trade restrictions.
Green comments: “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.
“By restricting China’s access to high-end semiconductors, Washington sought to slow its progress in AI,” he adds.
Instead, says Green, 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 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.
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.”