Since last week, the U.S. government’s new tariff policies have dominated news cycles, generating panic for investors and consumers.
President Donald Trump kicked off a highly volatile economic period with an event he described as “Liberation Day.” But as the tariff turmoil continues to wreak havoc on the U.S. economy, the only thing most people seem to feel “liberated” from is financial stability.
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Lately, many prominent tech stocks have been subject to high volatility, as the tariffs drive the type of uncertainty Wall Street hates. Now it seems they may be headed for even more trouble.
It’s true that Trump did recently announce a 90-day pause on most reciprocal tariffs, which helped reassure some investors. But experts remain highly concerned about something else that could significantly impact one of the tech sector’s fastest-growing industries.
Many tech stocks have fallen recently amid high volatility sparked by the recent tariffs.
Image source: Costfoto/NurPhoto via Getty Images
A storm could be brewing for major tech companies
Trump has made it abundantly clear that he believes these tariffs will benefit the U.S. economy. He’s presented them as a means of incentivizing companies to start doing more manufacturing on U.S. soil, thereby creating more jobs for American workers.
That may sound appealing in theory, but it doesn’t mean the trade war Trump has launched will end up helping the U.S. According to one expert, it could inadvertently deliver a gift to China, one that helps the country win one of the most important races in decades.
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Right now, companies are locked in heated competition to conquer the global artificial intelligence (AI) market. While U.S. companies such as OpenAI and Anthropic have made noteworthy progress with their large language models (LLMs), Chinese companies are threatening to overtake them.
In January 2025, Chinese AI startup DeepSeek shocked the tech world when it rolled out a model that had been trained for much less money than previously thought possible. Not only that, it had been built on older, less advanced chips, which proved enough to send leading tech stocks such as Nvidia (NVDA) into a nosedive.
Former Google CEO Eric Schmidt predicted that this could help China overtake the U.S. on the path to AI supremacy. Now the tariffs may help them accomplish that goal even faster.
Experts are concerned that the tariffs could help Chinese companies move ahead in the global AI arms race at the expense of the U.S. Adam Thierer, a senior fellow at the R Street Institute think tank, recently discussed the risks that these tariffs could pose to the U.S.’s AI interests.
Thierer recently appeared before the U.S. House lawmakers to testify about the threat to U.S. national security that models like the DeepSeek R1 pose. But he sees the potential for even bigger, unanticipated problems to emerge.
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“It’s going to be very hard for the U.S. to win the so-called AI Cold War if America’s trade policies are simultaneously tanking global markets, discouraging technological investments, and potentially undermining traditional alliances with key allies,” he states.
Trump likely didn’t intend for U.S. allies to start turning to China for their technology needs. But that may be exactly what happens, as tariffs cause massive disruptions in the global supply chain and companies rush to meet manufacturing demand.
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These supply-chain problems stand to impact many U.S. chipmakers such as Nvidia and Intel, both of which could see their market shares threatened if lower-priced Chinese products become preferable to European buyers. DeepSeek has already shown the world that new cutting-edge chips aren’t always necessary to build a model that can take the world by storm.
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However, companies like Google and Microsoft could also be severely affected. Both tech leaders have significant investments in areas such as AI infrastructure and cloud computing. If customers start turning to Chinese AI platforms, they could also end up losing part of their market share.
“In previous industrial revolutions, it was the U.K., and then the U.S., that developed more effective, low-cost products and services that ultimately became market leaders, then national and global leaders in their fields,” Fortune reports. “Now, China wants to use its open-source AI models like DeepSeek in the same way.”
For these reasons, Thierer believes American tech moguls such as Elon Musk, Jeff Bezos, and Sam Altman need to “get unified in their response” to what could be a significant blow to their industry.
“If they’re all on their own, and they’re just trying to cut deals, they’re not going to get very far,” he noted, adding that the best strategy is for the tech community to take a stand together and make clear these policies undermine the broader interests of the U.S., particularly when it comes to AI advancement.
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