It's a MAG-7, not a MAGA problem: Treasury Secretary Scott Bessent taunts investors, says Wall Street wipeout is due to DeepSeek-led AI bubble, not Donald Trump's tariffs

It looked like a classic case of markets reacting to political risk. But Treasury Secretary Scott Bessent sees it differently. He’s pointing to something else entirely: the tech sector’s infatuation with artificial intelligence.

What does DeepSeek have to do with the stock crash?

According to Bessent, the root of the problem lies with the MAG-7—that is, the big seven tech stocks: Meta, Apple, Google, Amazon, Microsoft, Nvidia, and Tesla. These stocks ballooned in value after the release of DeepSeek, China’s powerful open-source AI model, back in January.

In a Bloomberg TV interview, Bessent explained, “The Nasdaq peaked on DeepSeek day. So that is a MAG-7 problem, not a MAGA problem.”

In other words, the AI hype pushed valuations too high too fast, and what we’re seeing now is a natural correction—not a tariff-triggered collapse.

Live Events

Are tariffs really just a distraction from bigger risks?

Not everyone agrees with Bessent’s analysis. Many investors and analysts argue that the sudden surge in import duties played a direct role in the market’s downward spiral.

Jacob Falkencrone, global strategist at Saxo Bank, called April 2 “a Liberation Day for the American economy” from Trump’s point of view—but a nightmare for the rest of the world. Falkencrone said this was the most aggressive round of U.S. tariffs in over a century, and that markets reacted exactly how you’d expect: broad-based sell-offs across everything from tech to retail to industrials.

So while DeepSeek may have sparked earlier tech jitters, the tariffs were the final shove off the edge.

Why is the Treasury so focused on the bond market instead?

There’s another layer here. While stocks were getting hammered, Bessent’s eyes were on something