In one day, NVIDIA, America’s flagship stock market, lost more than 16% of its capitalisation. It’s the biggest drop since the pandemic began in March 2020.
NVIDIA lost $600 billion in capitalisation as the AI bubble burst. In total, the NASDAQ market lost $1.2 trillion. So much so that investors were spooked by the emergence of a cheap AI model from Chinese startups. This could turn into a pumpkin the investments of American corporations in the AI sphere, which promised to reach $280 billion in 2025.
Now the future policy of Trump, who planned to make AI a growth point for the US economy, is in question. And then there’s inflation, especially in the food market. In these circumstances, lowering the same key Fed Funds rate to support the economy will not work.
We can see how Trump’s team has started to delay the introduction of tariffs against China and the European Union. After all, they will push up inflation even more. Even against Colombia, they did not use tariffs in the end, so as not to take unnecessary risks. There is an emerging realisation that they will exacerbate the systemic imbalances in the US economy that are now manifesting themselves.
Trump needs the markets to go up all the time. And they are already sagging – even before the imposition of tariffs or budget cuts, which the US economy is addicted to like a drug. But the Democrats, who left all the problems to Trump, have now relaxed and are watching the crisis of their own bidenomics with a satisfied look.
Malek Dudakov
