The stock market plunge has more to do with the emergence this year of China's DeepSeek artificial intelligence tool than with President Donald Trump's policies, U.S. Treasury Secretary Scott Bessent said in an interview released on Friday that signaled little concern about the ongoing nosedive.
"For everyone who thinks these market declines are all based on the President's economic policies, I can tell you that this market decline started with the Chinese AI announcement of DeepSeek," Bessent told conservative commentator Tucker Carlson.
"If I were to analyze in my old hat, and this is the only time I'm going to talk about it ... what's happening with the market I'd say it's more a Mag 7 problem, not a MAGA problem," Bessent, who ran a hedge fund until being tapped as Treasury secretary by Trump, said. "Mag 7" refers to the shares of the so-called Magnificent 7 - a group of seven high-performing tech stocks that had helped drive the market higher before its recent selloff. MAGA refers to Trump's "Make America Great Again" political slogan.
U.S. stocks have tumbled by around 10% in the two days since Trump announced a new global tariff regime that was more aggressive than analysts and investors had been anticipating. It is a drop that market analysts and large investors themselves have laid at the feet of Trump's aggressive push on tariffs, which most economists and the head of the Federal Reserve believe risk stoking inflation and damaging economic growth.
Stocks did take a hit in late January when Chinese startup DeepSeek launched a free AI assistant that it says uses less data at a fraction of the cost of incumbent services. It resulted in a record one-day loss of nearly $600 billion in value from the shares of AI chipmaker Nvidia (NVDA.O), one of the Magnificent 7.
But the market soon found its footing again and by mid-February, the benchmark S&P 500 Index (.SPX) had regained a record-high level. Then stocks turned south again starting in late February after a widely followed survey of consumers showed households growing broadly pessimistic about the economy's prospects and fearful that Trump's push for tariffs would drive up inflation. A raft of other surveys of businesses and consumers since then have flagged similar concerns, and other data has shown the pace of activity has slowed over the course of the first quarter of 2025.
The S&P has lost nearly 14% since February 19, and nearly $10 trillion of U.S. stock market value has been erased.
Bessent is only the latest Trump administration official to shrug off the plunge in markets, which has intensified following Trump's announcement on Wednesday of a global baseline import tax of 10% and much higher rates for goods from dozens of countries. Commerce Secretary Howard Lutnick has been dismissive of the drop as well.
Trump himself on Friday retweeted a social media post bearing the caption "Trump is Purposely CRASHING The Market" and featuring images of the president pointing at a large downward red arrow and of him signing executive orders at the White House.
Meanwhile, Bessent also told Carlson the administration retains a "strong dollar" policy and dismissed assertions by some analysts that the tariff drive was a deliberate effort to weaken the dollar to make U.S. goods more competitive on global markets.
"No one should listen to anyone in the markets talk about the U.S. dollar other than President Trump or myself," Bessent said. "We are the only ones that speak for this administration, the United States government on dollar policy."
"We have a strong-dollar policy and we are putting in all of the necessary ingredients to make sure the dollar is strong over the long run," he said.
The dollar has shed nearly 6% of its value against major trading partners' currencies since Trump's inauguration on January 20.
