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This illustration photo shows the DeepSeek AI application logo on a black background displayed on a cell phone with a kaleidoscope-effect China flag in the background.
What DeepSeek means for the US-China AI war
A Chinese startup might have achieved what many thought was impossible: matching America’s best artificial intelligence systems at a fraction of the cost.
DeepSeek's latest AI model, DeepSeek-R1, was released earlier this month. The open-source model performs as well as top models from OpenAI and Google while using just a fraction of the computing power and cost to develop; it’s also a fraction of the cost to use.
DeepSeek claims that it only needed $6 million in computing power to develop the model, which the New York Times notes is 10 times less than what Meta spent on its model. The R1 model received the fourth-highest score on Chatbot Arena, which crowd-sources evaluations to rank large language models by capability, only behind two of Google’s Gemini models and ChatGPT-4o and ahead of Anthropic’s Claude 3.5 Sonnet.
If you take DeepSeek at its word, then China has managed to put a major player in AI on the map without access to top chips from US companies like Nvidia and AMD — at least those released in the past two years. Joe Biden’s administration placed strict export controls on these chips, so if the company has had access it may not be forthright about that.
For now, the US markets are indeed taking DeepSeek at its word. Nvidia stock fell nearly 17% on Monday, erasing a record sum from its market capitalization — $589 billion in a single day. The Nasdaq stock exchange ended the day down 3%, as a result.
The revelation about DeepSeek has come as Donald Trump tries to spur AI infrastructure in the United States, heralding the $500 billion Stargate project. But China’s new open-source model might have just changed the landscape when many thought the United States was running away with the race.
In a speech Monday evening, Trump called news of the DeepSeek model a “positive” due to its cheap cost but said American industry needs to compete. “The release of DeepSeek, AI from a Chinese company should be a wakeup call for our industries that we need to be laser-focused on competing to win.”Marco Rubio speaks after he is sworn in as Secretary of State by U.S. Vice President JD Vance at the Eisenhower Executive Office Building in Washington, on Jan. 21, 2025.
Tough talk on Taiwan
US Secretary of State Marco Rubio clashed with Chinese Foreign Minister Wang Yi in their first phone call on Friday over the independence of Taiwan, according to State Department spokesperson Tammy Bruce. During the conversation, Wang reaffirmed China’s position that the island nation is part of China and reportedly told Rubio “I hope you will act accordingly,” a Chinese phrase usually employed by a superior warning a student or employee to behave and act responsibly. Rubio has previously called Beijing the top US threat and was twice sanctioned by China in 2020.
And Rubio may have more wars of words with Wang in the future. China is reportedly ramping up efforts to encourage the independence movement on the Japanese island of Okinawa, which hosts 70% of US bases in the region – and is a mere 466 miles from Taiwan.
Chinese state media frequently highlights US military crimes in Okinawa, and Chinese social media propaganda claims most Okinawans favor independence. A poll published in May 2022 showed that only 3% of residents favored full independence, although 48% supported greater autonomy through a federal arrangement with Tokyo.
Reports suggest Beijing also tried but failed to establish an underground police station in Okinawa and plans to establish a Ryukyu Research Centre to remind locals of the island’s status as a former independent empire until it was annexed by Japan in 1609. Beijing has also been conducting a “charm offensive,” stressing Okinawa’s cultural ties to China – and strengthening its claim to the island.President Donald Trump attends a bilateral meeting with Chinese President Xi Jinping during a G20 leaders summit in Osaka, Japan, in 2019.
Trump creates a power vacuum in the world.
During his first week in office, Donald Trump took steps to withdraw the US from two major international commitments: the Paris Climate Agreement and the World Health Organization.
Trump’s reasoning on both was, broadly speaking, the same: Like many American conservatives, he sees international obligations as needless constraints on US power and sovereignty. But that may create opportunities for other global powers, not least China.
Dragon in the room? With one of the world’s two largest economies (and polluters) out of Paris, the other, China, has an opportunity to shape global norms in its favor. China emits more greenhouse gasses than anyone but is also a world leader in clean energy technology and financing.
Could China look to boost its influence at the WHO as well? Beijing supplies less than 1% of the organization’s annual budget right now, compared to more than 15% (about $1 billion) from the US. China’s relationship with the WHO has been complicated – Beijing, for example, went to great lengths to stymie the organization’s probe into the origin of COVID-19.
The bigger picture: “America First” will entail scaling back from a range of international commitments. But while Trump may abhorobligations, power abhors a vacuum. As the US withdraws, who will fill the gap? In a GZERO world, can anyone?
Container ships in front of the port of Bremerhaven.
How scared should the world be of Trump’s economic threats?
On Wednesday, President Donald Trump used his social media platform to threatenVladimir Putin with “high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States” unless he struck a bargain over Ukraine.
There’s just one problem: Russia has very little trade with the US. Americans imported just $2.8 billion in goods from Russia from Jan. to Nov. 2024, less than a tenth of the pre-war figure and less than 1% of all US imports over the same time period. The extensive sanctions already in place have hardly brought Moscow to its knees, and arguably benefited US rivals like China, Iran, and North Korea. It’s tough talk, but it’s not likely to push Putin to the table.
China is a different story. Trade with the US added up to an average of $54 billion per month in 2024, and the 60% tariffs Trump threatened to put on China on the campaign trail would cause severe damage to both economies. That may be why Trump is backing off the high sticker number and said Tuesday he is considering imposing at 10% tariffs on Chinese goods as soon as Feb. 1.
Now, 10% is a number that Beijing feels is much more manageable. China is experiencing price deflation — a really damaging phenomenon with one silver lining in that it could mean US consumers wind up paying about the same prices even if Trump hikes tariffs. The central government is also promising funds to stabilize the stock market in the face of potential tariffs and prevent investors from seeking safer shelter for their cash.
The fears are more real in Europe, where Trump threatened to impose tariffs without specifying a rate on Tuesday. Growth in the region’s most important economies is already stagnating, and even small barriers to trade with their most important partner will have serious consequences. Further economic troubles could empower far-right movements across the continent, which may suit Trump just fine. We have our eye on Germany, which will hold elections in precisely one month.
And don’t forget Canada and Mexico, which are staring down the barrel of 25% tariffs that Trump threatened on Tuesday as well. It’s creating a decidedly tense atmosphere in North America, with Canadian Prime Minister (for now) Justin Trudeau promising retaliation, which Mexican President Claudia Sheinbaum has hinted at as well.
The bottom line? You’re probably in for rising prices in the near future … unless everyone can come up with a reason for Trump to let them slide. We’re watching what Trump says when he speaks at the World Economic Forum in Davos on Thursday.
Firefighters work to extinguish a fire at a hotel in the ski resort of Kartalkaya in Bolu province, Turkey, January 21, 2025.
Hard Numbers: Ski resort fire in Turkey, Bolton loses Secret Service protections, Putin and Xi hold joint meeting, Historic snow in the South
76: A devastating fire at Turkey’s Grand Kartal Hotel ski resort killed 76 people and injured scores of others on Tuesday. The blaze began at 3:30 a.m. on the restaurant floor of the 12-story building, quickly engulfing it and forcing desperate guests to jump from windows or attempt escapes using bed sheets.
17: President Donald Trump revoked John Bolton’s Secret Service protection hours after taking office on Monday, despite ongoing threats against Bolton from Iran. Bolton, who served as Trump’s national security advisor for 17 months and had previously lost protection after leaving the administration but had it restored by Biden, expressed disappointment but not surprise. The move comes amid documented Iranian assassination plots against Bolton and follows Trump’s revocation of Bolton’s security clearance.
95: Russian President Vladimir Putin and Chinese President Xi JinpingcelebratedDonald Trump’s first official day in office by reaffirming their “no-limits” partnership on Tuesday in a joint televised meeting that lasted 95 minutes. Though Trump was not directly named, the timing suggests that the two world leaders may be pursuing a coordinated response to the new president, which has threatened to levy tariffs on China and end Russia’s war with Ukraine.
8: A historic polar vortex-related snowstorm is hitting the Gulf Coast, bringing record-breaking snow to Texas and Louisiana. The National Weather Service issued its first-ever blizzard warning for Lake Charles, Louisiana, while Lafayette, Louisiana, already has 8 inches. With the region ill-equipped for winter weather, travel disruptions and service outages are expected to last for days. Remarkably, New Orleans received more January snow than Anchorage, Alaska.
U.S. President-elect Donald Trump's nominee to be U.S. Secretary of the Interior Doug Burgum attends the vice president?s dinner ahead of the inauguration of Trump, in Washington, U.S., January 18, 2025.
Doug Burgum’s coal-filled energy plan for AI
The AI race depends on fossil fuels. That was the message from Doug Burgum in his Senate confirmation hearing last Thursday.
Burgum is currently auditioning for two jobs. If confirmed by the US Senate, the former North Dakota governor will not only serve as secretary of the interior but also as the head of a new committee called the National Energy Council.
Burgum said that the US will lose its “AI arms race” with China unless it takes full advantage of fossil fuels. To run artificial intelligence models on advanced processors, data centers require copious amounts of electricity. He criticized wind and solar energy and said the country needs more “baseload” electricity from coal. “The sun doesn’t always shine, and the wind doesn’t always blow,” Burgum told senators, signaling plans for a deregulatory environment in the energy sector.
Companies are rethinking their climate ambitions in the age of AI. In July, Google’s Chief Sustainability Officer Kate Brandtadmitted that the company’s goal to become carbon “net zero” by 2030 is now “extremely ambitious.” The Biden administration has encouraged the development of nuclear energy infrastructure as a way to get more “clean energy” to pursue AI at scale without further delaying progress on climate goals. Google and Microsoft have struck deals for nuclear energy, while Meta is seeking a deal of its own.
Burgum’s confirmation hearing showed that while Trump’s administration may be just as enthused about dominating global AI, it’ll be less stringent on using renewable or clean energy to do so.
Is the TikTok threat really about AI?
Four years after President Donald Trump’s initial unsuccessful attempt to ban TikTok on national security grounds, Congress succeeded in passing bipartisan legislation to force the app's removal, which former President Joe Bidensigned into law. The ban, requiring mobile app stores, cloud hosts, and internet service providers to drop TikTok, was upheld by the Supreme Court on Friday despite challenges from TikTok, content creators, and free speech advocates who argued it violated the First Amendment.
Yet TikTok’s presence in America continues through an unusual turn of events. After briefly going offline in the US late Saturday, the app resumed service on Sunday ahead of President Trump’s inauguration on Monday, with the new president issuing an executive order late Monday to keep TikTok operational for another 75 days. This executive intervention, however bizarre since Trump initiated the effort to ban TikTok during his first term, also raises complex legal questions about presidential authority to override — or ignore — congressional legislation.
Throughout this political saga, a fundamental question remains: What exactly is TikTok’s threat to national security? Critics typically focus on two main concerns: China’s potential access to American user data and its ability to influence public opinion through the app’s content algorithm.
While TikTok stands as one of the world’s most sophisticated implementations of artificial intelligence in social media, its role in the broader US-China AI competition is nuanced. The platform’s AI capabilities, though powerful, operate largely parallel to rather than directly within the ongoing technological rivalry between the two nations, which is more focused on large language models, generative AI, and the advanced chips that power these systems.
“TikTok is AI, but not the kind that is fueling today’s global AI race,” explained Tinglong Dai, a professor at Johns Hopkins Carey Business School. “Its recommendation engine is more akin to reinforcement learning, the AI technique behind AlphaGo, the DeepMind system that mastered the board game Go by training against itself. Unlike generative AI models like ChatGPT, TikTok's AI isn’t about creating – it’s about optimizing engagement and influence.”
This distinction is important. While attention has focused on TikTok’s data collection practices, experts suggest the more significant concern lies elsewhere. After all, TikTok collects about as much data from users as any other social media app.
Kenton Thibaut, senior resident China fellow at the Atlantic Council’s Digital Forensic Research Lab, said that data collection would become a bigger issue if the US were to enter formal conflict with China. “Should the US end up in a conflict with China, it is the device-level compromises that the app represents” — such as collecting real-time location data — “that, in my opinion, pose a much greater potential threat than the data-gathering or algorithmic manipulation concerns that are currently at the fore of the conversation surrounding the app,” she said.
But TikTok’s algorithm is more relevant to the AI race than the data it collects, according to Xiaomeng Lu, director of geo-technology at Eurasia Group. “That’s why China indicated that ByteDance can’t sell TikTok’s AI recommendation algorithm without government approval last time around, and is very likely still holding that view,” she said.
The potential value of this algorithm hasn’t gone unnoticed by the private sector. Perplexity AI’s recent bid to merge with TikTok’s US operations, reportedly valued at “well north of $50 billion,” suggests that TikTok’s recommendation system might be valuable for advancing the capabilities of an AI search engine like Perplexity.
However, Anton Dahbura, executive director of the Johns Hopkins University Information Security Institute, offers a more skeptical view: “I have no reason to doubt that TikTok’s algorithm is very good, but given the state of many software technologies today, it isn’t irreproducible,” he said. “However, controlling the flow of information on such a scale and for nefarious purposes by any company should be recognized as unethical, irresponsible, and hopefully someday, illegal.”
The real concern, according to Dai, extends beyond mere technology: “The bigger story isn’t TikTok’s data or even ByteDance's dominance — it’s Xi Jinping’s global ambitions. TikTok gives China an unprecedented ability to shape what Americans see, think, believe, and even dream.”
With TikTok poised to survive in the United States under President Trump’s conditional approval, pending a potential partial sale, the platform represents an unprecedented scenario in American media: Never before has such an influential platform, powered by sophisticated AI and used by millions of Americans, remained under the potential influence of an adversarial nation. But politics makes the strangest bedfellows: TikTok CEO Shou Zi Chewattended Trump’s inauguration on Monday, an assurance that Trump will rewrite the typical bounds of the US-China relationship, perhaps even softening his stance on China if he feels like it serves him well.TikTok CEO Shou Zi Chew testifies before the House Energy and Commerce Committee on Thursday, March 23, 2023 in Washington D.C.
Looks like the TikTok ban is coming. Probably. And with unintended consequences
Barring an eleventh-hour reprieve, TikTok’s operations in the US are likely to be shut down on Sunday. China is said to be considering a sale of its stateside outfit to X owner Elon Musk as the incoming administration seeks a pause on the ban so it can pursue a deal to keep it running. While both of those options look unlikely, at least in the short term, President-elect Donald Trump is considering an executive order that would delay enforcement of the ban for 60 to 90 days.
The Supreme Court hasn’t ruled on a challenge to the ban yet, nor is it required to by the Sunday deadline. The law, passed in April, only requires that US app stores no longer carry or permit updates of TikTok, and that internet service providers block access to the TikTok website. That would leave existing users with access to the platform, though it would degrade over time. But ByteDance, the social media platform’s owner, announced Wednesday that it is preparing to fully shut down the app in the US when the ban comes into effect.
Meanwhile, in a case of unintended consequences, TikTok users have been signing up en masse for China’s TikTok equivalent, RedNote — or Xiaohongshu, which translates to “little red book.” The shift is connecting US and Chinese social media users, which means that one of the aims of the TikTok ban, keeping US social media users away from China, may come up short of its goal. But it’s also exposing Chinese users to thousands of Western voices – something Beijing may not appreciate either.