Good morning. Today we're talking about the Chinese AI startup shaking up the tech world, US trade tariffs and AstraZeneca’s changing UK views.

Big Stories

Tech turmoil

The emergence of DeepSeek, a Chinese AI startup, has sent shockwaves through the US tech market, triggering a significant sell-off in AI-related stocks, most notably Nvidia. DeepSeek's latest model, R1, reportedly matches the performance of leading chatbot models from OpenAI and Google while utilising significantly fewer resources. DeepSeek-R1 cost approximately $5.6m to develop, a fraction of the billions invested by US tech giants like Meta, OpenAI and SoftBank in their AI development efforts. This stark cost difference has shaken investor confidence and raised concerns about the massive investments being made by US companies in the AI race. Nvidia, a key supplier of high-performance semiconductors crucial for AI development, was particularly hard hit, with its stock plunging significantly, wiping out hundreds of billions of dollars in market value. Microsoft, Meta and Apple weighed in during earnings calls, acknowledging the startup’s cheaper, competitive AI models. Microsoft sees the innovation as a win for developers, while Meta seems cautious yet intrigued.

Trade war talk

The US is set to impose significant tariffs on imports from Canada, China and Mexico this week, potentially sparking a trade war. Under the new policy, a 25% tariff will be applied to goods from Canada and Mexico, while a 10% tariff will be imposed on imports from China. These tariffs will impact a wide range of goods, including oil, automobiles and agricultural products, potentially leading to significant price increases for US consumers. The move is expected to have a significant impact on the North American economy, given the deep trade integration between the US, Canada and Mexico. Canada and Mexico have already prepared retaliatory tariffs, raising concerns about a potential trade war. The Trump administration has justified these tariffs as a means to address the flow of fentanyl into the US, immigration concerns and trade imbalances.

Pharma giant u-turn

AstraZeneca has cancelled a planned £450m investment in a UK vaccine manufacturing plant, citing a reduction in government funding. This decision follows a dispute over the level of support offered by the current Labour government, reversing an agreement reached with the previous Conservative administration. The pharmaceutical giant cited the reduced government grant offer as a key factor in its decision, highlighting concerns about the UK's attractiveness as a location for life sciences investment. This move has sparked criticism of the government's approach to supporting the UK's life sciences sector and raised concerns about the country's ability to attract and retain investment in this crucial area. AstraZeneca's decision comes at a time when the UK government is seeking to bolster its life sciences sector as part of its economic growth strategy.

Elsewhere...

TikTok sale: President Donald Trump has said Microsoft is in discussions to acquire TikTok and that he would like to see a "bidding war" over the sale of the social media app.

Cutting back: Tesco is cutting 400 jobs across its stores and head office management, after revealing it is embarking on a major efficiency programme to “simplify” the business.

Back online: Barclays says it has fixed the IT glitch that left thousands of customers locked out of their accounts on Friday and Saturday, and promised to compensate them for any losses incurred.

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Number of the Day

$8 million

Price of one commercial slot during this year’s Super Bowl, at least 10 of which were sold. Viewership for last year’s big game surpassed 123 million.

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