The US Stock Market That Survived Nvidia’s Plunge Couldn’t Withstand the Tariff Threat

The new tariffs are arriving so quickly that it is dimming hopes that Trump is merely using tariffs as a negotiating tool.
Last week, the US stock market was hit by the DeepSeek chatbot, the earnings reports of large tech companies, and the Federal Reserve’s interest rate decision meeting. Just as the stock market seemed to have weathered these storms safely, the tariff threat emerged.
The S&P 500 index fell 1% last week in total. The decline was not particularly large, but the severe impact on the artificial intelligence theme and Nvidia (NVDA) stock - one of the key driving factors behind the rise of the US stock market - should still draw the attention of investors.
The Performance of the US Stock Market Last Week
The stock market plunge last Monday (January 27) reflected an anxious sentiment: if DeepSeek could truly rival ChatGPT, then the price of artificial intelligence might be much lower than previously expected. This could be a potential boon for users, but it was a blow to large - cap tech stocks that have invested billions of dollars in their projects, as well as to the view that the US leads the rest of the world in artificial intelligence.
This is a significant shift, although how much change it will bring remains to be seen. Dan Ives, an analyst at Wedbush, wrote in a research report, "Tech investors think that DeepSeek will greatly change the expected $2 trillion in AI spending over the next three years, and we’re still shocked by this idea."
Investors' attention then almost immediately shifted to the earnings reports of Meta Platforms (META), Tesla (TSLA), Apple (AAPL), and Microsoft (MSFT). They did their best to soothe the market. The first three companies succeeded, while the last one failed. Overall, however, the remarks made by the management of tech companies brought some comfort to investors, and many even saw a positive side.
Although investors were worried about Silicon Valley’s dominance in artificial intelligence, as of the close of trading last Thursday, the S&P 500 index was basically flat: the index did not fall back to the low point touched last Monday, with 333 constituent stocks rising and 169 falling. Ed Clissold, a strategist at Ned Davis Research, said, "The stability of short - term breadth is a sign of a strong stock market."
At the same time, Tom Essaye, the president of Sevens Report, pointed out that the economic data also performed well. He wrote in a research report, "The fourth - quarter GDP data was slightly weak, but not extremely so. Consumer spending remained strong, and the US economy is basically in a 'Goldilocks' state." The Federal Reserve, which was on the sidelines, announced that it would keep interest rates unchanged after a two - day meeting, which did not have a major impact on the stock market.
However, Washington, D.C. was not calm, and the sustainability of the stock market’s rebound has never been certain. Last Friday, US President Trump reiterated that he would impose a 25% tariff on Mexico and Canada, turning a pleasant rebound into a decline.
Starting from February 4, the US will impose a 25% tariff on goods imported from Mexico and Canada, a 10% tariff on energy products imported from Canada, and an additional 10% tariff on China.
The new tariffs are arriving so quickly that it seems to be weakening the hope that Trump is largely using tariffs as a negotiating tool. The new US tariffs have already triggered counter - threat from other countries, and Trump has also said he will impose tariffs on goods imported from the European Union.
Inga Fechner, an economist at ING, wrote in a research report, "Nearly half of US imports will be affected by higher tariffs, which could disrupt supply chains and seriously impact the economies of the US, Canada, and Mexico. Sectors such as automotive and manufacturing, which are deeply integrated into the US supply chain, will face problems of rising costs and supply disruptions."

James Reilly, a senior market economist at Capital Economics, wrote in a research report, "The US trade policy has once again dominated the news headlines, and this issue is not going to end here."
Perhaps it's time for investors to step aside for a while.