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Deep Seek And Tariffs Reveal That The USA Establishment Have No Interest In The Free Market

We tried to explain that they would never work, but few listened.

Now the response by Biden and Trump exposes exactly what the USA thinks about free markets. They are, as the video above exposes, an illusion that is merely lip service by charlatans. (Interestingly, the spellcheck for ‘charlatans’ suggested ‘Christians’ as an alternative.) It seems to have nailed the U.S. to a tee).

The concept of the free market has long been celebrated as the cornerstone of the American economic system, with the United States often positioning itself as its global champion. However, recent developments in the tech sector, particularly the rise of a Chinese company called DeepSeek, have raised serious questions about whether the U.S. truly embraces the principles of market competition or selectively applies them when faced with a formidable rival. The arrival of DeepSeek and its revolutionary AI chatbot has sent shockwaves through global markets, exposing chasms in the U.S.’s rhetoric relating to free-market ideals.

The Rise of DeepSeek

DeepSeek, a startup founded in 2023 in Hangzhou, China, by former hedge fund co-founder Liang Wenfeng, has quickly become a major player in the AI industry. Its chatbot models, V3 and R1, have outperformed rivals, including OpenAI’s GPT-4, on key benchmarks while costing a fraction of the investment required to train similar systems. According to reports, the company trained its flagship DeepSeek-V3 model with less than $6 million worth of computing power using Nvidia’s H800 chips. This stands in stark contrast to the billions spent by American tech giants like OpenAI, Oracle, and SoftBank in developing their own AI models.

DeepSeek’s rapid ascent has not just disrupted the AI landscape but also caused significant financial repercussions in the United States. On Monday, DeepSeek’s announcement of its groundbreaking research paper on the R1 model led to a $600 billion market value wipeout for Nvidia; the largest single-day loss in U.S. stock market history. Overall, U.S. tech stocks have lost over $1 trillion in value, a reflection of the profound threat posed by the Chinese startup.

U.S. Government Intervention: Free Market or Protectionism?

The U.S. government’s response to DeepSeek’s rise further highlights its lack of desire to adhere to free-market principles. Under President Joe Biden, restrictions were placed on the export of Nvidia’s high-performance A100 graphics processor chips to China. This move was widely interpreted as an attempt to curtail China’s progress in AI development. Now, with Donald Trump’s return to the presidency, similar protectionist measures are expected to intensify. On his first day back in office, Trump signed an executive order pledging to close loopholes in export controls, signalling a continuation of Biden’s restrictive approach.

While these policies are framed as necessary for national security, critics argue they betray the free-market ideals that the U.S. claims to uphold. Venture capitalist Marc Andreessen has described the situation as “AI’s Sputnik moment,” warning that overregulation and protectionist measures could hinder American innovation and cede the AI race to China.

Data Concerns and Double Standards

One of the major criticisms levelled at DeepSeek relates to its handling of user data and its inability to address controversial topics. The app’s responses have been criticised for sidestepping questions about sensitive issues, such as Taiwan, the 1989 Tiananmen Square protests, and the treatment of Uyghur Muslims in Xinjiang. These omissions have led to concerns about censorship and potential misuse of data by the Chinese government.

However, it’s worth noting the double standards at play here. While the U.S. government and media highlight these concerns, they have been relatively muted when it comes to scrutinising American tech giants like Facebook and Google, which have faced their own controversies over privacy violations, data misuse, and content moderation. If the principle is to ensure ethical practices and data security, then why the inconsistency in addressing the failings of domestic firms versus foreign competitors?

Other Examples of Market Protectionism

The DeepSeek case is not an isolated incident. A closer examination of U.S. economic policy reveals a pattern of intervention and protectionism whenever American industries face significant competition from abroad.

Huawei and 5G Technology

The U.S. government’s treatment of Chinese telecom giant Huawei is another example of its selective approach to market competition. Huawei emerged as a global leader in 5G technology, outpacing American rivals with its advanced and cost-effective infrastructure. Instead of competing on innovation, the U.S. government imposed strict sanctions on Huawei, citing national security concerns. These measures included banning Huawei equipment from American networks and pressuring allies to follow suit.

While national security is a legitimate concern, the timing and intensity of the actions against Huawei raise questions about whether they were motivated by genuine threats or economic rivalry. By limiting Huawei’s access to critical technologies and markets, the U.S. effectively stifled competition rather than allowing the free market to determine winners and losers.

TikTok and Social Media Dominance

TikTok, the wildly popular short-video app owned by Chinese company ByteDance, has faced relentless scrutiny from U.S. lawmakers and regulators. Allegations of data privacy risks and potential ties to the Chinese government have led to calls for outright bans on the platform in the U.S. Despite TikTok’s assurances about data localisation and transparency, the U.S. continues to pursue actions that would either force the sale of TikTok’s American operations or block its usage altogether.

Contrast this with how the U.S. has handled domestic social media platforms like Facebook, Instagram, and Twitter. These companies have faced their own data scandals, from Cambridge Analytica to breaches exposing millions of users’ personal information. Yet none of them have faced the existential threat of a government-mandated shutdown. This selective scrutiny suggests that the U.S. is more concerned about maintaining dominance in the tech sector than adhering to free-market principles.

Steel and Aluminium Tariffs

Beyond the tech industry, the U.S. has a long history of imposing tariffs to protect domestic industries from foreign competition. Under President Trump’s first term, the administration imposed tariffs on steel and aluminium imports, arguing that they were necessary to protect American jobs and industries. While these tariffs were framed as measures to ensure economic security, they contradicted the free-market ethos by artificially inflating prices for American consumers and businesses.

Economists have long argued that such protectionist measures do more harm than good by distorting market dynamics and inviting retaliatory actions from trading partners. Yet, the U.S. has repeatedly turned to tariffs as a tool to shield domestic industries from global competition.

Trump’s Universal Tariff Plan: A Blow to Free Market Ideals

President Trump’s announcement of plans to impose tariffs on all imports represents one of the most striking deviations from free-market principles in recent history. The proposed policy, framed as a strategy to strengthen domestic industries and protect American jobs, would impose blanket taxes on goods entering the U.S. from abroad. While this may appeal to populist sentiments, it flies in the face of the free-market ideals the United States claims to champion.

How Tariffs Undermine Free Markets

The essence of a free market lies in the unrestricted flow of goods, services, and capital, allowing competition to determine prices and allocate resources efficiently. Tariffs, however, create artificial barriers that distort market dynamics. By raising the cost of imports, tariffs incentivise consumers and businesses to purchase domestically produced goods, even if those goods are less efficient or more expensive to produce.

Trump’s universal tariff plan would have several detrimental effects:

  1. Higher Consumer Prices: Tariffs act as an indirect tax on consumers, as the increased cost of imports is typically passed down in the form of higher prices. This undermines consumer choice and forces Americans to pay more for everyday goods.
  2. Reduced Global Efficiency: Free trade allows countries to specialise in producing goods where they have a comparative advantage. Tariffs disrupt this system, leading to inefficiencies as domestic industries are shielded from competition and lack incentives to innovate or improve.
  3. Retaliation and Trade Wars: Blanket tariffs invite retaliatory measures from trading partners, leading to trade wars that further restrict the flow of goods and services. Such conflicts harm global economic growth and strain diplomatic relations.

Contradictions in Trump’s Policy

Trump has often positioned himself as a proponent of the free market, criticising government overreach and excessive regulation. Yet, tariffs are fundamentally anti-market, as they represent one of the most direct forms of government intervention in trade. By artificially protecting domestic industries, the administration is effectively picking winners and losers, a practice that free-market advocates have long decried.

Moreover, Trump’s argument that tariffs are necessary for “economic security” echoes the same rationale used to justify other protectionist measures, such as export restrictions on Nvidia chips or sanctions on Huawei. While these policies may serve short-term political goals, they undermine the principles of open competition and market-based solutions.

A Self-Defeating Strategy

Ironically, tariffs often harm the very industries they are designed to protect. By increasing the cost of imported raw materials, such as steel and aluminium, tariffs make it more expensive for American manufacturers to produce goods. This can lead to job losses and reduced competitiveness in global markets. Additionally, retaliatory tariffs from other nations can restrict access to foreign markets, further hampering U.S. exports.

The Hypocrisy of “Free Market” Advocacy

The recurring theme in all these cases is the hypocrisy of the U.S.’s stance on the free market. While it preaches the virtues of open competition to other nations, it frequently resorts to interventionist policies when its own industries are threatened. This double standard undermines the credibility of American economic leadership and raises questions about the true motivations behind its actions.

One could argue that the U.S. does not truly believe in the free market but instead uses the rhetoric of market freedom as a tool to advance its own economic interests. When foreign competitors like DeepSeek, Huawei, or TikTok challenge American dominance, the response is not to innovate or compete but to regulate, restrict, or ban.

A Wake-Up Call for the U.S.

The rise of DeepSeek and its impact on the global AI industry should serve as a wake-up call for the United States. Instead of resorting to protectionism and intervention, the U.S., if it truly believed in the principles of the free market, should focus on fostering innovation and competing on a level playing field. True adherence to free-market principles requires accepting competition, even when it comes from unexpected or unwelcome sources.

Trump’s universal tariff plan exposes the inherent contradictions in the U.S.’s approach to free markets. While the rhetoric of market freedom is used to justify interventions abroad, such as sanctions on Chinese companies, the imposition of tariffs at home reveals a willingness to abandon these principles when politically convenient.

Also, if the U.S. truly believed in the free market, it would embrace competition on a global scale, even when it comes at a cost to domestic industries. If the U.S. continues to selectively apply its free market ideals, it risks eroding its credibility as a global economic leader. The world is watching, and the message is clear: actions speak louder than words. To truly champion the free market, the U.S. must be willing to practice what it preaches and not continue to obfuscate reality.

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