By Jamal Mecklai, CEO, Mecklai Financial

It is hard to see how there won’t be a crisis in the markets. And DeepSeek may well turn out to be the canary in the coal mine for US tech hegemony Like everyone else I was intrigued — and, if truth be told, delighted — with the recent news about the Chinese artificial intelligence (AI) tool, DeepSeek. I downloaded it and, since I had just written an article about how I believed it was possible that the DXY could fall all the way to 100 or below, I asked DeepSeek what was the likelihood of that happening in the next two months.

To my amazement, it started writing a short essay and, in 42 seconds — 42 seconds! — it concluded that there was a 20-30% chance that the DXY could fall below 100 in two months. I was thunderstruck — the arguments covered every issue I had thought of and then some, and (for better or worse) I am considered something of an expert in the field.I had been thinking about the DXY and where it was likely to go, and had been building a case in my mind for a possibly significant decline.

The idea had been percolating in my mind for a few weeks — but 42 seconds? Wow!Of course, I don’t think I’ll be out of a job just yet — the key remains asking the important questions. So, DeepSeek is certainly a winner.But the bigger story is the fact that it was the most downloaded app on Apple’s App Store last week, and that it caused an earthquake on the NASDAQ led by a gargantuan fall in Nvidia — because it reportedly doesn’t need the kind of high-energy-intensity huge cost chips to provide the same (or better and quicker) responses than ChatGPT, the current AI favourite.

To be sure, DeepSeek is trained to avoid politically sensitive questions (it provided no sound response to the Tiananmen Square massacre), but then all tech and AI tools (US-owned or otherwise) are similarly constrained, and likely to get more so in the age of Trump.And, perhaps the most dramatic news about DeepSeek is that researchers claim that it was trained for just $6 million, a fraction of the $100-plus million alluded to by OpenAI’s Sam Altman when talking about Chat GPT-4.

Could this be the future of tech development, in direct contrast to the pump-billions-of-dollars-into-it US model?Once again, a low-cost Asian economy has taken ideas (and no doubt intellectual property) from the US and reverse engineered it and/or innovatively redeveloped it to where it could (theoretically) drive the giant US tech industry to its knees, just as Japan did to the US car, consumer electronics, steel, motorcycle, and shipping industries in the 1960s and 1970s.

Again, like Japan, China started with very low-cost and poor-quality products, but has ramped up dramatically in recent years to where it is already a significant player in most high-tech sectors today.An article in The Wire pointed out that “over the past month or so, there has been some striking technology news from China.

(Most recent) was the low-altitude flight of two new (indigenously-developed) combat aircraft… (before that, they launched) a huge amphibious assault ship that can double as an aircraft carrier”. Both these mimicked US systems from a few years earlier. And then, last week China “conducted an experimental fusion nuclear fusion reactor (which was able to) maintain its operational state for over 17 minutes, a world record”.Clearly DeepSeek, for all its public impact, is not a one-off.

Over the years, China has “bought stolen, coerced technology from foreign companies… (and has) systematically set up a parallel system of laboratories and institutions to absorb or re-innovate these technologies”. It is also investing heavily on young (35-year-old) engineers.

The Chinese government, for all its current problems, thinks long-term (and always has).In this, it is poles apart from the new US administration, which is transactional and short-term. Trump’s plans to deport huge numbers of immigrants and to impose significant tariffs on imports into the US — both theoretically in the worthy cause of bringing the left-behind Americans back into play — will without doubt fan inflation, which will lead to a louder and more public battle with the US Fed over interest rates.

This could result in a possible collapse in US equities or a dramatic fall in the dollar or both.I just listened to an interview with Steve Bannon, who, although half-way discredited, speaks with remarkable clarity about the basic drivers of the MAGA (Make America Great Again) movement. And, while he certainly speaks a credible line on the need for deportation, there are other key players in the Trump pantheon who have dramatically different views.

Thus, it would seem there will be a lot of confusion about what gets the boss’ decision-making attention and what doesn’t.The market, of course, won’t wait. Thus, as the Trump administration settles in, it is hard to see how there won’t be a crisis in the markets. And DeepSeek may well turn out to be the canary in the coal mine pointing to a serious weakening of US tech hegemony.