According to U.S. Treasury Secretary Scott Bessent, the stock market decline is more related to China’s AI tool, DeepSeek, than to President Donald Trump’s policies.
Bessent dismissed concerns over the ongoing market sell-off, stating that the current market drop began with the announcement of China’s DeepSeek AI. He told conservative commentator Tucker Carlson: “If I were to put on my old hat and this is the only time I’m going to say it… what’s happening in the market would be more a ‘Mag 7’ issue than a MAGA issue.”
‘Mag 7’ refers to the ‘Seven Magnificents,’ a group of high-performing tech stocks that had previously boosted the market. ‘MAGA’ stands for Trump’s political slogan “Make America Great Again.”
U.S. stocks have fallen around 10% in just two days since Trump announced a more aggressive global trade regime than expected by analysts and investors.
This drop is attributed by market analysts and major investors to Trump’s aggressive tariff offensive, which many economists and Federal Reserve Chair believe could escalate inflation and harm economic growth.
Stock values took a hit at the end of January when Chinese startup DeepSeek launched a free AI assistant claiming to use fewer data at a fraction of traditional service costs. This led to a record single-day loss of nearly $600 billion in NVIDIA’s market value, one of the ‘Seven Magnificents.’
However, the market quickly recovered, and by mid-February, the S&P 500 index had returned to its highest level.
Shares fell again in mid-February following a consumer survey showing households were more pessimistic about economic prospects and feared Trump’s tariff push could increase inflation.
Since then, surveys of businesses and consumers have highlighted concerns, and other data has shown that economic activity slowed in the first quarter of 2025.
The U.S. dollar has lost nearly 6% of its value against major trading partners’ currencies since Trump’s inauguration.
