As East Asia was enjoying the holiday, U.S. investors were frantically selling off shares in Big Tech in response to the sudden popularity of DeepSeek, a Chinese AI startup with a high-performing model trained on a much smaller amount of computing power. 

Then, over the weekend, the U.S. imposed 25% tariffs on Canada and Mexico, and an additional 10% tariff on China. The taxes fulfill a pledge made by Trump after his election last November.

There’s still one Asian exchange that has yet to react to the past week’s news. Markets in mainland China will reopen Tuesday, after being closed for a week because of the Chinese New Year. 

Hong Kong

Hong Kong’s Hang Seng Index dropped as much as 1% on Monday, before paring back losses in the afternoon. The Chinese city’s stock exchange closed for the holiday on Wednesday, just after the DeepSeek news roiled U.S. markets.

Consumption-focused companies sank on Monday trading, with e-commerce firm JD.com falling around 3.5%. Trump’s tariffs could be a drag on the Chinese economy, already struggling with low domestic consumption and a property crisis. 

Still, optimism about China’s AI prospects lifted some Hong Kong–traded stocks. Alibaba rose almost 6% after the e-commerce company unveiled the newest iteration of its Qwen model last week; local chipmaker SMIC rose over 9% following reports that DeepSeek is using its Ascend AI chips (produced in partnership with Huawei) for inference. 

Taiwan

Taiwan’s stock market has been closed since Jan. 23, meaning investors on Monday had to grapple with more than a week’s worth of news, including Trump’s threat to impose tariffs on Taiwan-made semiconductors.

The benchmark Taiex Index fell around 3.5%, driven by declines in major firms like TSMC, which makes most of the world’s advanced chips, and Foxconn, the world’s largest contract electronics manufacturer with an in-progress Mexico plant for bundling Nvidia chips. TSMC fell almost 6%, while Foxconn was down by as much as 8%. 

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Quanta Computer, which is working with Nvidia to build AI servers, fell by almost 10%. 

Taiwanese tech firms like TSMC and Foxconn have benefited from the generative AI boom. But DeepSeek’s development is challenging bullish projections of how many chips and servers are needed to run an AI model. Similar concerns about capital investment helped drive shares in U.S. tech firms lower last week. 

Taiwan’s government is already reacting to Trump’s tariff threats. On Monday, the Ministry of Economic Affairs said it will set up a hotline to help Taiwanese businesses affected by tariffs, such as providing relocation services to places like the U.S. or Southeast Asia.

South Korea

Korea’s KOSPI Index fell by 2.5% on Monday, as Trump’s tariff moves could threaten both South Korea’s export-heavy economy, as well as the supply chains of its major manufacturers. Electronics giants Samsung and LG, and automakers Kia and Hyundai, all have manufacturing facilities in Mexico. 

Foreign direct investment from South Korea to Mexico reached $1.3 billion just for the first nine months of last year, according to data from the Mexican government.

South Korea also enjoys a trade surplus with the U.S., potentially putting it at risk for tariff measures (like Canada and Mexico).

The DeepSeek shock is having an effect in Korea as well. SK Hynix, a major supplier of memory to Nvidia, is down 13% since South Korea’s market reopened Friday following the Lunar New Year break.

Japan

Unlike other East Asian markets, Japan stayed open for all of last week—but Trump’s tariff shock still sent its stocks lower on Monday. 

The Nikkei 225 fell by around 2.7% as investors grappled with what Trump’s Mexico tariffs meant for Japanese supply chains. 

Shares of Toyota Motor, the world’s largest auto producer, fell 5% on Monday while Honda Motor and Nissan Motor shares declined by around 7.2% and 5.6% respectively. The three automakers all have production facilities in Mexico.