Only a few weeks into 2025 and financial markets are already awash with surprises and disruptions. The emergence of China’s low-cost artificial intelligence (AI) model DeepSeek and US President Donald Trump’s new tariff war have upset the market calm.

Ending tariff exemptions on low-cost packages from China has broad bipartisan support in Washington, and Trump pulled the plug when he raised tariffs on Chinese goods by 10% earlier this week. Goods sent through duty-free packages became subject not only to existing tariffs — 25% for many Chinese products — but also the new 10%.

Pause on duties for low-cost packages in place while US Commerce Department confirms procedures for collecting tariff revenues US President Donald Trump signed an executive order on Friday delaying tariffs on lower-value packages from China that enjoy the exemptions until the US Commerce Department can confirm that procedures and systems are in place to process packages and collect tariff revenue.