In a week of economic turmoil, AI has been thrust into the center of a global financial storm triggered by sweeping U.S. tariffs.
Market Meltdown: AI Takes a Hit
The unveiling of new tariffs by former President Donald Trump sent shockwaves through global markets, wiping nearly $10 trillion in value and hitting the tech sector hardest. AI firms, heavily reliant on international supply chains, found themselves particularly exposed.
Major players like Apple and Tesla suffered significant losses, with Apple shares dropping 20% and Tesla shedding another 5% in a day. NVIDIA, a cornerstone of AI innovation, is now trading 25% lower than earlier this year.
A Borderless Industry Meets National Policy
AI’s rapid evolution has been built on a globally integrated ecosystem — from Taiwan’s semiconductor production to China’s manufacturing power, European research hubs, and U.S. venture capital. That delicate balance has now been disrupted.
Taiwan has been one of the hardest-hit nations, reeling from a 32% tariff that sparked a 10% market crash. Taiwan’s Foreign Minister Lin Chia-lung has called for immediate negotiations with the U.S., expressing readiness to discuss terms at any time (Reuters).
Supply Chains Under Siege
While semiconductors have temporarily dodged the tariff bullet, other components critical to AI infrastructure haven’t been as lucky. Data centers that power AI applications like ChatGPT rely on complex global logistics for hardware, cooling, and power systems — all of which now carry steep import costs.
Industry expert Gil Luria warned that non-chip elements make up nearly a third of total data center costs, and that the semiconductor exemption may not last long (Fortune).
Did AI Create the Tariffs?
In a bizarre twist, economist James Surowiecki pointed out that the formula used to calculate the tariffs closely resembles output from popular AI models like ChatGPT and Gemini. The simplistic approach — dividing the U.S. trade deficit by a country’s exports — matches what AI suggests when asked how to address trade imbalances.
Surowiecki and other economists criticized the method as “extraordinary nonsense,” raising alarms about whether generative AI played a role in shaping national economic policy.
Blame Game: China and AI in the Crosshairs
Amid market chaos, U.S. Treasury Secretary Scott Bessent deflected blame, stating the root cause was China’s AI platform DeepSeek, not domestic tariffs. He argued on Tucker Carlson’s show that the sudden drop stemmed from DeepSeek’s launch, not Trump’s policies. However, the data contradicts him — markets remained stable until Trump’s announcement, with the Dow Jones plummeting 1,679 points on the same day.
AI’s Resilience Tested
Some analysts argue that AI is resilient enough to survive the economic shock due to its borderless architecture and strategic value. Yet, the industry’s dependence on global components, especially in hardware, means it remains vulnerable in the short term.
U.S. efforts to re-shore chip production under the CHIPS Act are progressing, but new fabrication plants won’t be ready for mass production for several years. Until then, the U.S. remains dependent on foreign manufacturing.
Looking Ahead
Despite the financial turbulence, the U.S. administration has no plans to pause or revise the tariffs. Trump has doubled down, insisting, “We’re not looking at that.”
For now, the world watches with bated breath as the AI sector, like many others, braces for what lies ahead. Will the global AI ecosystem adapt and rebound, or will these trade barriers fundamentally reshape the industry?
In a related development, industry observers are also tracking how AI integration in supply chains is accelerating as a response to geopolitical disruptions — a clear sign that adaptability may define the next era of AI growth.
