The stock market's plunge has more to do with the emergence of Chinese AI assistant DeepSeek this year than with President Donald Trump's policies, US Treasury Secretary Scott Bessent told American blogger Tucker Carlson, the New York Post reports.
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“For anyone who thinks the market's decline is related to the president's economic policies, I can tell you that the decline started with the announcement of China's DeepSeek AI,” Bessent said.
He said what's happening to the stock market is more of a Mag 7 problem than a MAGA problem, referring to the Magnificent 7 stocks, a group of the most influential companies on the US stock market: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.
Let's remember that MAGA is Trump's political slogan “Make America Great Again”.
U.S. stocks have fallen about 10% in two days after Trump announced new tariff policies with a number of countries that were more aggressive than analysts and investors had expected.
Market analysts and major investors attribute the drop to Trump's aggressive push for tariffs, which most economists and the Federal Reserve chairman say could fuel inflation and hurt economic growth.
The stock did take a hit in late January, when Chinese startup DeepSeek launched an AI assistant it said used less data and cost half as much as existing services. That led to a record one-day loss of nearly $600 billion in the value of shares of AI chip maker Nvidia, one of the Mag 7.
But the situation soon stabilized, and by mid-February the benchmark S&P 500 index had once again reached a record high. In late February, stocks began to fall again, after a survey showed pessimism about the economic outlook and concerns that Trump's desire to impose new tariffs would lead to higher inflation.
Since February 19, the S&P has lost about 14%, and the value of the U.S. stock market has fallen by almost $10 trillion.
The “strong dollar” policy
Bessent also told Carlson that the Trump administration was maintaining a “strong dollar” policy and rejected some analysts' assertion that the tariff hikes were a deliberate attempt to weaken the dollar to make American goods more competitive in global markets.
“We have a strong dollar policy and we are making every effort to ensure the strength of the dollar in the long term,” he said.
The dollar has lost nearly 6% of its value against the currencies of its major trading partners since Trump's inauguration on January 20, 2025.
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