FT News Briefing Inside the Trump tariff debate
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Jan 29, 2025 A new AI model by DeepSeek triggers a sell-off in energy stocks, highlighting the volatility in the sector. Trump’s Treasury secretary advocates for a 2.5% universal tariff, leading to debates on trade policy. Boeing faces its second-largest annual loss due to labor issues. A revealing study shows that ETFs are enhancing market pricing efficiency, countering past criticisms about their role in market fluctuations. Investors are encouraged to adopt a top-down approach in stock market strategies amid these shifting dynamics.
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AI's Power Demands
- DeepSeek's AI breakthrough impacted energy stocks due to uncertainty about AI's power demands.
- Initial assumptions of high energy consumption were challenged by DeepSeek's efficient model, causing market volatility.
Tariff Proposals
- Scott Bessent, Trump's Treasury Secretary, proposed a gradual 2.5% universal tariff on US imports.
- This contrasts with Trump and other advisors who favor higher initial rates.
Gradual Tariff Implementation
- Bessent's 2.5% tariff would increase by 2.5% each month.
- This gradual approach aims to mitigate market shock and preserve Trump's negotiating leverage.