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.
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.
Related: Analysts send strong message on Amazon stock amid turmoil
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.