The U.S.-China trade war got itself a sequel, here is the play-by-play breakdown.

Trump’s Play:

On Feb. 4 President Trump imposed a 10% tariff on all Chinese imports, claiming that the nation has not taken strong enough action to stop fentanyl from entering the U.S. Law enforcement agencies and government officials in the U.S. believe that China is the dominant producer of chemical precursors used by Mexican cartels to produce fentanyl.

Also, Trump scrapped the de minimis exemption, which previously allowed imports under $800 to enter the U.S. duty-free. Expect your Temu hauls to take a price hike.

China’s Response:

China in retaliation, announced 10-15% tariffs on U.S. coal, LNG, crude oil, and machinery, effective Feb. 10. Beyond tariffs, China also:

What’s Next?

While this all sounds pretty hardcore, the implications of China’s response seem relatively mild, suggesting room for negotiations.

Elon Musk is leading the charge to “streamline” the U.S. government under Trump’s new Department of Government Efficiency (DOGE). But the details aren’t exactly clear.

So, what has DOGE done so far?

Musk claims DOGE has saved $1 billion, but critics call it an "illegal power grab." Some lawmakers were even blocked from USAID headquarters when they attempted to investigate the situation. Bottom line? Musk’s DOGE is bulldozing bureaucracy at record speed, but whether it’s legal, or effective, is still up for debate.

DeepSeek, the shockingly powerful and ridiculously cheap Chinese AI chatbot that wiped $1 trillion off the U.S. stock market last week (we covered it two weeks ago 🐌🤭), is now facing bans from governments worldwide.

In the U.S., Congress is pushing a bill to ban DeepSeek from all government-owned devices, following reports that the chatbot may be transmitting user data to China Mobile. Texas has already issued the ban, with the U.S. Navy and NASA quickly following suit.

Australia, Taiwan, and South Korea have banned DeepSeek across all government systems as well, also citing national security concerns. While Italy took the most aggressive step—outright banning the app entirely.

Beyond security concerns, DeepSeek is also being investigated by OpenAI for “distilling”—a forbidden machine-learning technique that involves training a model directly on another’s outputs. But let’s not forget, OpenAI also faces plenty of its own IP theft accusations.

Europe’s stock market is suddenly outpacing the US, with Germany’s DAX up 9% and France’s CAC 40 climbing 8% - well above the S&P 500’s 2.45% gain. What’s fuelling the rally?

But look out: Trump’s looming tariff threats could slam Europe’s rally, returning it to what some called “uninvestable”. Investors are bullish, for now.

Alphabet (Google’s parent company) turned in an A- on its report card Tuesday, but its investor parents—expecting straight A’s—weren’t impressed. Revenue grew 12% YoY⁴ to $96.47 billion, and EPS⁵ climbed to $2.15 from $1.64 last year, but Google Cloud and search advertising—historical cash cows—grew slower than expected.

Despite this, Alphabet is doubling down on spending, announcing a $75 billion capital expenditure⁶ plan for 2025—a significant jump from previous years. Much of this will go toward expanding AI and cloud infrastructure. CEO Sundar Pichai justified the investment by pointing to an 8x increase in computing power usage from Google Cloud customers over the last 18 months.

But Wall Street isn’t buying it. With the rise of DeepSeek, an alarmingly cost-efficient Chinese AI model, questions have surfaced over whether U.S. tech firms are overspending on AI infrastructure.

All this sent Alphabet’s class C⁶ shares tumbling as much as 9% this week. Google is working hard to sell its vision—but investors are just…selling.