Asian tech stocks rose Tuesday, following news that U.S. president Donald Trump had paused tariffs on Mexico for a month, while also postponing tariffs on Canadian exports.

Gains were broad-based across tech stocks in Japan, South Korea and Hong Kong, and came as their counterparts in the U.S. cut their losses on Monday, following tariff announcements that came late in the day.

Japanese Semiconductor players Advantest and Lasertec led gains among the country’s tech stocks, rising 5% and 4.81%, respectively.

Other Japanese tech companies also rose. Tokyo Electron was up 2.82%, Renesas Electronics gained 2.99% while SoftBank Group advanced 1.53%.

Taiwanese chip company TSMC and manufacturer Foxconn rose 2.8% and

Tech stocks in Asia had come under pressure after Chinese startup DeepSeek launched a free, open-source language model that challenged the supremacy of the U.S.-led AI ecosystem. These stocks subsequently rebounded last week, but the rally mostly got stalled Monday over tariff worries.

South Korean tech stocks were also trading higher on Tuesday, with Samsung Electronics gaining 4.13% and SK Hynix rising marginally, up 0.63%.

The latest gains are a reversal from the weakness seen in both stocks last Friday when the South Korean market re-opened after a four-day break. Shares in Samsung Electronics have also been under pressure after its fourth-quarter profit missed estimates on the back of higher costs.

Chinese tech major Tencent’s shares rose 3.07% in HongKong, while shopping platform Meituan’s stock advanced 5.06%, electronic vehicle maker BYD rose 4.22%, Xpeng was trading 14.46% higher and Li Auto gained 9.35%.

Chinese AI-linked stocks also rose with Alibaba up 3.09% and Kingsoft Cloud rose 7%.

The gains in Chinese companies come even as U.S. tariffs on CnaChina are set to kick in. Trump will reportedly speak with President Xi Jinping this week, signaling the intent to avoid a broader tariff war between the world’s top two economies.

Correction: The story has been updated to reflect that the U.S. has paused tariffs on Canada and Mexico.

Shares of auto giants fell sharply on Monday, but were off their intraday lows after President Donald Trump said he is pausing his new 25% tariff on goods imported from Mexico until March 1.

Trump signed executive orders on Saturday to implement 25% tariffs on Mexican and most Canadian goods, while imposing a 10% duty on Canadian energy products and additional 10% on Chinese goods, which are set to take effect from Tuesday.

The deferment for Mexico followed the country’s president agreeing to immediately send 10,000 soldiers to the U.S. border to prevent drug trafficking from Mexico.

In the U.S., General Motors was 2% lower as of 11:30 a.m. ET, while Ford was down less than 1%. Shares of Tesla were off roughly 5%. U.S.-listed shares of Chrysler parent Stellantis were down about 3%.

In Europe, shares of French car parts supplier Valeo were off 7%. Germany’s Volkswagen also slipped nearly 5%.

U.S.-listed shares of Japanese auto giants Toyota Motor and Honda Motor were down 2% and 4%, respectively. Tokyo-listed shares of Mazda were off about 8%, while Nissan Motor’s stock was off 6%

The U.S. president warned Americans could feel “some pain” when the measures come into force, but said the tariffs were necessary “because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl.”

Canada and Mexico have hit back, threatening to impose retaliatory measures that included tariffs.

Shares of global automakers plunged as investors fretted over the impact of a potential trade war.

Analysts expect Trump’s tariffs to have a profound impact on the global automotive industry, citing a heavy reliance on manufacturing operations across North America, particularly in Mexico, and complex supply chains.

“As it relates to Autos stocks, we do not see any absolute winners in a NA trade war, and we expect Auto Stocks broadly to struggle,” Wolfe Research analyst Emmanuel Rosner said Monday in an investor note.

Trump has suggested the European Union may be next to face tariffs, telling reporters that additional duties on the bloc could be imposed “pretty soon.”

For its part, the 27-nation bloc has pledged to respond to any U.S. duties in a proportionate way.

U.S.-EU automotive trade has traditionally been a core pillar of the European automotive industry’s success.

Tariffs on motor vehicle imports from the EU would likely raise the cost of European cars in the U.S. market, according to an analysis from Oxford Economics. The step will also likely result in a sharp contraction of EU auto exports to the critically important U.S. market.

For Germany, Europe’s largest economy, the prospect of U.S. tariffs on European autos comes at a time when it’s top original equipment manufacturers (OEMs) are already reeling.

Volkswagen, Mercedes-Benz Group and BMW have all issued profit warnings in recent months, citing economic weakness and sluggish demand in China, the world’s largest car market.

Volkswagen on Monday said that it is currently assessing the potential effects of U.S. tariffs on both the company and on the broader automotive industry.

“At the same time, we continue to promote open markets and stable trade relations. These are essential for a competitive economy and for the automotive industry in particular,” the automaker said in a statement.

“We are counting on constructive talks between the trading partners to ensure planning security and economic stability and to avoid a trade conflict,” they added.

A BMW spokesperson described free trade as “one of the most crucial drivers of growth and progress,” noting that “tariffs, on the other hand, hinder free trade, slow down innovation, and set a negative spiral in motion. In the end, they are detrimental to customers, making products more expensive and less innovative.”

 — CNBC’s Michael Wayland contributed to this article.

The imminent U.S. tariffs are likely to deal a significant blow to China’s already-faltering economy, reinforcing calls for more forceful stimulus measures to bolster the country’s growth.

U.S. President Donald Trump on Saturday followed through on a threat made after his presidential victory, imposing 10% tariffs on Chinese goods, starting Tuesday, over Beijing’s alleged failure to prevent the flow fentanyl into the U.S.

The blanket 10% tariffs will be levied on top of the existing tariffs of up to 25% that Trump had imposed on Chinese goods during his first presidency.

The additional 10% tariffs would reduce China’s real GDP growth by 50 basis points this year, economists at Goldman Sachs said in a report Monday.

The investment bank expects China’s real GDP growth to slow to 4.5% this year while domestic price growth remains under pressure due to weak demand, with consumer inflation expected to rise just 0.4% in 2025. The consumer price inflation barely grew last year, rising 0.2% year on year. Higher U.S. tariffs could further strain domestic prices as external demand for Chinese goods weaken.

As Trump started his second term, he ordered his administration to investigate Beijing’s compliance with a trade deal struck during his first presidency in 2020. The final result of the assessment will be delivered to Trump by April 1, potentially setting the stage for further tariff actions, economists said.

“Clearly the 10% tariff hike came in quickly and lower, but there remains a lot of uncertainty on the timing and scale of additional tariffs on China,” Wang Tao, chief China economist at UBS Investment Bank told CNBC on Monday.

“We are not revising our 2025 baseline forecast of 4.0% GDP growth for China,” she said, factoring in additional U.S. tariffs of 60% on a quarter of China’s exports and greater policy support from Beijing.

Chinese yuan plunged 0.60% to 7.3631 against the greenback in offshore trading Monday, before trimming losses, according to LSEG data. The offshore yuan has lost 3.7% since Trump’s presidential victory in early November.

Markets in mainland China were shut for the Lunar New Year and will resume trading on Wednesday.

A primary tool used by the People’s Bank of China to manage the currency has been the daily reference rate — the onshore yuan is allowed to trade only within a 2% range of this reference rate.

The spot level where PBOC sets the reference rate on Wednesday will be a key indicator to gauge Beijing’s reaction to the tariff hikes, said Ding Shuang, chief economist of Greater China and North Asia at Standard Chartered Bank.

“We expect China to mainly rely on stimulus to boost domestic demand, instead of large devaluation, to offset the tariff impact,” Shuang added.

Since last year, the central bank has been capping the exchange rate guidance at under 7.20 per dollar, a move seen as a signal of its determination to defend the currency.

As the tariff rate climbs, the central bank could allow a “gradual drift higher” in the onshore yuan between 7.40 and 7.50 against the U.S. dollar, Goldman Sachs said, expecting the PBOC to prioritize FX stability ahead of monetary policy easing.

The central bank could “skip” other easing measures like cutting the amount of cash that banks must hold as reserves, while seeking to manage liquidity via open market reverse repurchase operations, according to Goldman Sachs.

China was able to “effectively bypass” the hefty tariffs during Trump’s first term, but it is “not so easy to escape the impact of tariffs this time around,” Barclays said in a note on Monday.

Policy rooms to maneuver exchange rate depreciation, large-scale trade diversion and reduction in exporters’ profit margins have all “diminished significantly,” the bank said.

As an external trade war looms, economists expect more fiscal spending to offset China’s deflationary pressures and boost consumer spending.

While the economy hit the growth target of 5.0% last year, it struggled to emerge from a real estate collapse and weak consumer and business confidence, leaving exports as a key driver of growth. Even in 2023, exports contributed almost 20% of the country’s GDP, according to World Bank data.

In 2024, China’s exports to the U.S. grew by 4.9% to $524.6 billion, accounting for nearly 15% of its total exports. China’s trade surplus with U.S. stood at over $360 billion last year, compared with $336 billion in 2023, according to the official customs data.

Since Beijing introduced a flurry of stimulus measures late last year, including interest rate cuts and a five-year fiscal package totaling 10 trillion yuan ($1.4 trillion), some sectors have seen economic activity stabilize.

For this year, the government has pledged to make boosting consumption a top priority and expanded a consumer goods trade-in program.

Markets are monitoring Beijing’s next policy steps as trade tensions with the U.S. are expected to intensify. The top leadership is anticipated to unveil further stimulus measures and set the annual GDP growth target at the annual parliamentary meetings in March.

“We continue to expect policymakers to announce more expansionary fiscal policies … with the augmented fiscal deficit widening by 2.6 percentage point of GDP in 2025,” Goldman Sachs economists said.

China’s Commerce Ministry said Sunday that it would challenge Trump’s tariff decision at the World Trade Organization, condemning the sweeping tariffs as a “serious violation of international trade rules.”

While vowing to “take corresponding countermeasures to firmly safeguard its own rights and interests,” China’s statement, however, stopped short of announcing any specific plans for tariffs.

Filing a lawsuit with the WTO has largely been a symbolic move that Beijing has taken against tariffs on Chinese-made electric vehicles by the European Union too. In recent weeks, Chinese officials have reiterated that Beijing believes there is no winner in a trade war.

Beijing’s response so far has appeared “mild to start,” said Lynn Song, chief economist at LNG, but he cautioned some Chinese policymakers may still be on holiday, hence delaying the announcement of any concrete retaliation until they return to work on Feb. 5.

“If pushed into a corner, China’s retaliation could be stronger than what most expect,” Song added, suggesting Beijing has a range of tools to respond, including intensifying export controls or bans on rare earths, and measures targeted at American conglomerates with large reliance on the Chinese market.

Trump’s Saturday executive orders included additional 25% tariffs on goods from Mexico, one of China’s main export rerouting channels.

That may prompt China to shift exports to ASEAN and Latin American countries, while boosting trade ties with these nations to help offset “a more protectionist U.S.,” Song added.

Central banks, by and large, have one overarching mandate: to ensure price stability and control inflation in a country. Policymakers in South Korea need to contend with another responsibility: managing high household debt.

References to household debt often, if not always, come up in the Bank of Korea’s monetary policy decision.

BOK Governor Rhee Chang Yong said in a speech on Jan. 2 that “there has been some criticism regarding why the Bank of Korea takes household debt into account and appears overly cautious when deciding the Base Rate.”

Why then, is household debt so important to the BOK’s monetary policy considerations? The short answer: it’s too high. The long answer? Much more complicated.

Park Jeongwoo, Nomura’s economist for South Korea and Taiwan, told CNBC that the BOK is concerned about the negative long-term impact of higher household debt on growth.

“The BOK thinks [the] higher debt burden has weakened households’ spending power. At the same time, strong debt-financed demand for housing resulted in distorted capital allocation across the economy, leading to more allocation of capital to not-productive sectors.”

Two factors that contribute to the high amount of debt among households in South Korea is a heavy usage of credit cards, and the unique system of housing in South Korea.

Prospective homeowners can of course, buy their own homes outright, but for those who cannot, they need to rent.

But unlike most rental systems around the world, South Korean renters pay a deposit known as “jeonse” or “key money,” instead of a monthly rent, according to Samuel Rhee, co-founder, chairman and group chief investment officer for wealth platform Endowus.

The jeonse is a deposit about 50%-80% of the market value of the property. At the end of their lease, the deposit is returned to the renter. For the landlord, the jeonse is an interest-free loan, which they are free to invest.

However, renters will usually take out a loan to fund the jeonse deposit, which Rhee said causes “a lot of burden and excess debt in the system for housing.”

He notes that while the overall household debt to GDP ratio has not increased significantly in the past few years, rising interest rates have increased the burden of servicing the debt, “which has been the primary concern for the BOK and Korean government.”

Rhee pointed out that while the BOK had cut rates twice to take them to 3% at the end of last year, the banks have not passed on the lowered interest rates to consumers.

This means that while the BOK has cut rates, renters’ interest costs have not gone down.

Ryota Abe, who is an economist at the global markets and treasury department for Asia Pacific at Sumitomo Mitsui Banking Corporation, said that the household debt ratio in South Korea is of concern because it could affect the country’s economic growth by making the financial sector fragile.

“In case [a] credit crunch happens because the borrowers are not able to repay the debt as it is too huge, the issue will bring deflationary pressures as well as an economic recession.”

Abe cited figures by the Bank of International Settlements, which said South Korea’s household debt ratio stood at 91% of GDP as of the second quarter of 2024. In comparison, household debt in other advanced countries stands at 68.9% on average.

For comparison, data from the International Monetary Fund showed the country having the highest household debt to GDP ratio among Asian countries in 2023, at 93.54.

China, Asia’s largest economy, had a ratio of 63.67, while for India it was 39.16. Japan had a ratio of 65.66 in 2023.

Abe also said the ratio of debt to net disposable income was 186% in 2023 in South Korea, having ballooned from 130% in 2008.

Data shows that the speed of the debt increase is faster than the rise in wages and GDP, implying that the South Korean economy, particularly the household sector, depends highly on debt, Abe said.

“In a case where the sector fails to repay the debt, the negative shocks would be huge, which wouldn’t be limited in the sector but to the financial sector. If such a shock happened, the economy will be in catastrophe. Therefore, the Korean authorities need to reduce such risks beforehand,” he added.

The BOK faces a tricky path. It needs to cut rates so as to stimulate a slowing economy and alleviate the debt servicing burden, but a rate cut would weaken the won and may increase imported inflation.

More importantly, Endowus’ Rhee said a rate cut could spur an increase in potential demand for houses, leading to an acceleration in outstanding household debt.

“If you lower interest rates and debt increases and this is used to stimulate housing demand, which causes house prices and rental prices to rise, then it is inflationary and BOK would want to limit the inflationary impact,” Rhee said.

Alex Holmes, research director for Asia at the Economist Intelligence Unit told CNBC’s “Squawk Box Asia” earlier in January that 2024 was the first year that household debt had come down as a percentage of GDP, and the BOK will not want to cut rates too quickly to prevent a rebound.

China’s factory activity slowed in January as export orders dwindled ahead of additional U.S. tariffs that are set to come into effect Tuesday, a private-sector survey showed Monday.

The seasonally adjusted Caixin/S&P Global manufacturing purchasing manager’s index came in at 50.1 in January, missing Reuters poll forecast of 50.5.

Manufacturing PMI stayed above the 50 level that separates expansion from contraction for a fourth straight month, but it nudged down from 50.5 in December, 51.5 in November and 50.3 in October.

The private survey reading follows the official PMI data in January that showed activity unexpectedly contracted to 49.1, after expanding for three straight months, reinforcing calls for more stimulus to spur growth. Reuters had forecast PMI to come in at 50.1.

Domestic demand improved in January while new export orders fell for a second straight month, as overseas demand for consumer goods declined, according to the survey. The employment sub-index also slumped to the lowest level in nearly five years, as businesses remained cautious amid economic uncertainty.

Shipment orders have started to soften after exporters rushed to front-load them toward the end of last year, Lynn Song, chief China economist at LNG told CNBC. “This side is likely to remain under pressure in the coming months, particularly if the U.S. tariffs do indeed come into effect on Feb. 4.”

Domestic orders will need to “play a larger role in driving manufacturing in 2025, as we can see tariffs are starting to take effect,” he added.

U.S. President Donald Trump on Saturday signed executive orders to impose 10% tariffs on Chinese goods — 25% on Mexican and most Canadian imports — starting Tuesday.

On his first day in office last month, Trump ordered his administration to investigate Beijing’s compliance with a trade deal struck during his first presidency.

“Rising uncertainty in international policies could worsen China’s export environment, posing significant challenges for the economy,” said Wang Zhe, senior economist at Caixin Insight Group.

The tariffs came as China’s economy has been battling a slowdown. While the country achieved Beijing’s full-year growth target of 5.0% last year, it still struggles to boost growth amid tepid domestic demand and a prolonged real estate downturn, leaving exports as a key driver of growth.

“The policies introduced since September 2024 have delivered tangible results,” said Wang. However, he cautioned that the effectiveness of stimulus measures, such as large-scale equipment upgrades and trade-in programs for consumer goods, might diminish this year.

Since Beijing introduced a flurry of policy support measures late last year, some sectors have seen economic activity stabilize, but markets are monitoring Beijing’s next policy steps as trade tensions with the U.S. will likely intensify.

Chinese authorities have pledged to make boosting domestic consumption a top priority and expanded their consumer goods trade-in program this year.

China’s Commerce Ministry said on Sunday it would challenge Trump’s tariff decision at the World Trade Organization, condemning the sweeping tariffs as a “serious violation of international trade rules.” Beijing will “take relevant countermeasures to firmly safeguard its own rights and interests,” the statement said, but stopped short of announcing specific plans for tariffs.

Singapore’s Ministry of Trade and Industry (MTI) said in a statement Saturday that it expects U.S. companies to comply with U.S. export controls and local laws, following questions over the chips used by China’s DeepSeek to produce its AI model.

Markets were rocked this week after DeepSeek claimed its large language model outperforms OpenAI’s but cost a fraction of the price to train. However, questions were soon raised over the provenance of the semiconductors used to build DeepSeek’s R1 reasoning model given U.S. restrictions on exporting advanced AI chips in China. 

Bloomberg on Friday reported that U.S. officials were investigating whether DeepSeek had bought advanced semiconductors from chipmaker Nvidia via third parties in Singapore.

A Nvidia spokesperson told CNBC Monday that the chips used by DeepSeek were fully export-compliant. DeepSeek was not immediately available for comment when contacted by CNBC.

“We expect US companies, like Nvidia, to comply with US export controls and our domestic legislation. Our customs and law enforcement agencies will continue to work closely with their US counterparts,” MTI said in its statement.

“We have always upheld the rule of law, and acted decisively and firmly against individuals and companies that flout the rules.”

In its third-quarter results published in November, Nvidia said that Singapore accounts for almost 22% of its revenue but added that: “most shipments associated with Singapore revenue were to locations other than Singapore and shipments to Singapore were insignificant.”

MTI cited Nvidia’s comments in its Saturday statement and said the chipmaker said there was no reason to believe that DeepSeek had obtained any export-controlled products via Singapore.

“Singapore is an international business hub. Major US and European companies have significant operations here. Nvidia has explained that many of these customers use their business entities in Singapore to purchase chips for products destined for the US and other Western countries,” MTI added.

— CNBC’s Ryan Browne contributed to this report.

Gen Z is looking to escape the winter with new and exciting adventures, according to a recent report from Airbnb.

The company found that of all the generations, Gen Z travelers are the most likely to search for experiences in “nature” and favor outdoor activities. This is reflected in Airbnb’s list of the trending winter destinations for travelers born between 1997 and 2012.

“Warmer weather beach locales are really trending with Gen Z,” Ali Killam, Airbnb’s Editorial Lead, tells CNBC Make It. “But we’re also seeing Gen Z travelers head to cities that offer exciting cultural immersions with a blend of modern-day amenities and historical significance, while also being close to those outdoor nature experiences.”

The report states that over 75% of Gen Z travelers have used the Airbnb app to plan trips for winter 2025, and more than 60% seek trips lasting two to six nights.

Killam adds that although these young travelers are known for having budget-conscious mindsets and fast-paced lifestyles, they are still taking advantage of the time they have to disconnect from the hustle of their daily routines. The data shows they want to prioritize wellness and connect with nature on their trips.

“January is actually one of the most popular months for searching for Airbnb stays and planning travel,” Killam says. “This is likely driven by travelers who are looking to plan for the year and those who are experiencing winter and desperately looking to find that winter sun,” Killam says.

These are Airbnb’s top winter destinations on Gen Z’s bucket list for 2025.

• Porto Seguro, Brazil
• Praia Grande, Brazil
• Greater Orlando, Florida, United States
• Playa del Carmen Mexico
• Punta del Este, Uruguay

The Greater Orlando area of Florida was the only destination in the United States to rank as a top winter destination for Gen Zers.

“This might seem more like a popular family destination or family travel destination, but it is trending with Gen Z guests during this quieter winter season, which is a more affordable time to visit,” Killam says. “Of course, it is known for being home to some of the top amusement parks in the U.S., but the area also has a rising culinary and art scene. It offers a ton of great outdoor and nature activities.”

Brazil has two trending locales on the list. Killam attributes this to Gen Z travelers looking to soak up the sun and their desire to discover up-and-coming places.

It could also be a sign of Gen Zers looking to get the most out of their travel time: “These emerging beach locales in Brazil might also be detour destinations that are extensions of their Carnival trips,” Killam adds.

“So they can see as much as they can and recharge after taking part in the action-packed celebrations.”

• Alicante, Spain
• Munich, Germany

Killam says Munich, Germany is trending with young travelers because it is a city with a great blend of culture, history and nature experiences.

Munich offers travelers many outdoor activities, like hiking, skiing, and snowboarding. The city is also home to Oktoberfest and some of Germany’s largest breweries.

• Osaka, Japan
• Bangkok, Thailand

Killam says these two destinations in Asia were trending with Gen Zers because of how far their money can go there.

Bangkok, Thailand, has always been known as a budget-friendly destination, while travel to Japan from the U.S. has continued to increase over the years.

The number of travelers from the United States rose 153% in the first half of 2024 compared to the same period in 2019, according to CNBC. This could be partly due to favorable exchange rates.

Killam says both provide a blend of modern-day activities, while still being close to nature.

• Sydney, Australia

Our winter, is Australia’s summer, so it’s no wonder Gen Zers are looking to enjoy the sun. Located on the country’s east coast, Sydney is home to the iconic Bondi Beach and the Blue Mountains.

Sydney also offers travelers unique wellness experiences like stunning viewpoints while still enjoying the bustling city.

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As President Donald Trump threatens to impose his first tranche of tariffs on the world Saturday, Chinese manufacturers are bracing for impact.

Though Trump is pledging to take his biggest initial swing at Canada and Mexico with a proposed 25% tariff, the U.S. president has suggested China is still on his radar. Earlier this month, Trump said initial tariffs could start at 10% as soon as Saturday. On the campaign trail, he threatened tariffs on Chinese-made goods of 60% or more.

Trump has contended tariffs boost U.S. manufacturing and job growth, and early in his second term has used the threats to gain leverage in policy negotiations. Even so, the levies could raise prices for U.S. consumers on everything from furniture to electronics.

In China, new duties could damage exporters who rely on the U.S. market. On a recent trip to the manufacturing belt of Guangdong province, CNBC found factory owners preparing for the tariff threat. Here are three main takeaways:

Hoping to beat Trump’s tariffs, furniture seller Harry Li is doubling the number of products he ships to the U.S. and stockpiling them in warehouses there.

He expects the strategy will force him to raise prices as much as 10% — no matter what Trump’s tariffs turn out to be. 

He sells four out of five of his tables and other large furnishings to American consumers.

“I have to ship them in advance and take on more risk,” he said at his Foshan factory. 

His company Tianyiled plans to keep the extra inventory in the U.S. until Trump’s tariff plan for China becomes clearer.

In addition to stockpiling, Li is considering other ways to avoid the border taxes.

“One thing we can do is to pick those products not on the tariff list and export them to the U.S. instead,” he said. 

In the nearby industrial city of Guangzhou, water purifier maker Zheng Yu is scouring the globe to find a new production base to supply the U.S. outside of China.

He plans to set up assembly lines in a third country, buying some equipment and components from China while hiring locally for certain jobs. 

Zheng’s company Tesran is considering Vietnam, Malaysia, and Mexico as manufacturing bases, but is leaning toward Dubai even though costs will be 30% higher than in China.

“The domestic market is too competitive. We have been wanting to jump out of it for some time,” he said. “Trump’s tariffs gave us the final push.”

The Tesran founder is also already in touch with his U.S. clients to discuss splitting the tariffs. He is hoping his partners will take on at least half of the cost.

All the businesses CNBC spoke to had a breaking point at which it would no longer make sense to sell to the U.S. The tariff thresholds ranged from 20 to 60%, and depended on the industry and the size of a company’s margins.

Water purifier maker Zheng said another wild card is whether President Trump unleashes proposed universal tariffs that, in his case, would raise costs for Dubai. 

“Then the U.S. is out,” he said.

Across Guangzhou, Leng Rong, who makes skin care products, is worried he might have to stop exporting to the U.S. completely.

His goods got hit with tariffs north of 20% during Trump’s first term and it caused big losses for his company, Keni.

With his thin margins, Leng is hoping he can pass the cost of any tariff to his customers.

“In the past, we all felt the U.S. market was the greatest market that everyone wanted to sell to. But with all the uncertainties and unfriendly decisions, the U.S. is less attractive now,” Leng said at his Guangzhou factory. “It’s a real pity.”

Samsung Electronics on Friday reported better-than-expected fourth-quarter revenue and operating profit, though its operating profit sharply dropped from last quarter.

Here are Samsung’s fourth-quarter results compared with LSEG SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate:

• Revenue: 75.8 trillion Korean won vs. KRW 75.4 trillion
• Operating profit: KRW 6.5 trillion vs. KRW 6.8 trillion

Revenue was about 12% up from the same period from last year, while operating profit grew about 130%, year on year.

However, operating profit fell nearly 30% to 6.5 trillion won.

Fourth-quarter revenue beat Samsung’s own guidance of KRW 75 trillion, while operating profit came in line with the company’s forecast.

Samsung is a leading manufacturer of memory chips, which are utilized in devices such as laptops and servers, and is also the world’s second-largest player in the smartphone market.

“Although fourth quarter revenue and operating profit decreased on a quarter-on-quarter (QoQ) basis, annual revenue reached the second-highest on record, surpassed only in 2022,” Samsung said in its statement.

For the full year, Samsung reported KRW 300.9 trillion in revenue and KRW 32.7 trillion in operating profit. In 2023, the company posted an annual revenue of KRW 258.94 trillion and an operating profit of KRW 6.57 trillion.

For the current quarter, Samsung said that earnings might be limited due to weakness in its semiconductor business but that it would pursue growth through AI smartphones and other premium devices. 

“For 2025 as a whole, the Company plans to enhance technological and product advantages in AI, continue to meet future demand for high-value-added products and drive sales growth in premium segments,” it added.

This is breaking news. Please check back for updates.

This report is from this week’s CNBC’s “Inside India” newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe here.

This week, on my CNBC-issued three-year-old laptop, I ran a powerful artificial intelligence model known as DeepSeek-R1.

The new model, developed by the Chinese AI lab DeepSeek and released last week, sparked a massive fall in U.S. technology stocks. The highly competitive and potentially shockingly cost-effective AI model led investors to question the billions of dollars currently being spent by large technology companies.

While my brief foray into DeepSeek-R1 served only to satisfy my curiosity, millions of other people around the world are likely to have done the same with more productive goals in mind.

Among those experimenting with DeepSeek are likely to be Indian technology companies, which for the first time will be able to offer clients a powerful reasoning AI model, trained and hosted in-house, without relying on Big Tech firms.

China’s DeepSeek released its model free for commercial use and also made public the technology know-how to build such a model from scratch. The company said it spent a mere $6 million in AI chip costs to develop the model.

Although some have raised questions about the exact figure, it compares to the hundreds of millions — and sometimes billions of dollars — spent by American technology firms.

The development could mark the start of AI model development within India, as previous methods for training large language models have required thousands of energy-intensive and expensive AI chips.

It could also mark a major turning point for Indian technology companies such as Infosys, which have previously had to rely on AI models created by U.S.-based tech firms, such as Meta‘s Llama.

Keshav Murugesh, chief executive of business transformation firm WNS, said DeepSeek’s AI model is a “pivotal advancement” for Indian technology companies.

He suggested the low cost of development will enable new AI models to be trained in India’s regional languages and enable use cases previously deemed uneconomical. The vast majority of sophisticated large language models today, such as OpenAI’s o1 and Anthropic’s Claude Sonnet 3.5, can output text only in a handful of languages.

“By leveraging the innovations behind DeepSeek, these companies can significantly lower costs and accelerate their time to market,” Murugesh told CNBC. WNS, which is listed on the NYSE, revealed in its third-quarter call earlier this month, that it will soon be enabling generative AI use cases at a U.S. insurance firm, a top 10 client for the company.

Industry surveys have shown that data privacy and the high cost of implementing large language models are among the reasons why enterprises have resisted AI adoption. DeepSeek-R1’s benefits, if confirmed, would swiftly eliminate two of the top 10 concerns and could begin to address a multitude of others.

The Indian government has also embarked on subsidizing access to AI chips, known as graphics processing units, to enable academics and start-ups in the country to begin developing AI models.

Indian IT services companies could also benefit from DeepSeek in more indirect ways. Analysts expect large enterprise clients of IT companies to redirect budgets away from AI expenditure to other IT-related spending.

“DeepSeek is positive for Indian IT services, in our view,” said UBS equity analysts led by Shaleen Kumar in a note to clients. “While it is still too early to fully assess the impact, faster AI development that involves lower costs should help free up IT budgets, resulting in increased IT spend in other areas.”

It might not all be good news, however. Analysts at India-based broker Anand Rathi say domestic firms with “heavy exposure” to cloud computing giants like Microsoft, Amazon, Google and Oracle “may face short term headwinds” as nimbler companies outcompete them by pivoting to DeepSeek’s low-cost AI models.

Bank of America’s analysts also cautioned that a lower barrier to entry for service providers increases competition in the sector, although these risks are at “very preliminary stages” at the moment.

And so — in this globalized and connected world — a breakthrough in China has the potential to benefit rival India. However, DeepSeek’s R1 has the potential to turn into a double-edged sword much sooner than many expect.

AT&T, a large U.S. telecom operator with more than 150 million subscribers, slashed the number of customer support calls it receives by 30% in a single year, thanks to AI. The company has also made efficiency gains in software development.

“We’re spending less right now to develop new code internally and getting more,” said John Stankey, AT&T’s chief executive in a call with analysts. “And it’s through the application of AI and technology and what we’re able to do with generative AI.”

While expensive to implement using U.S.-developed AI models, it’s cheaper compared to high U.S. wages.

Given the growing concerns around unemployment, the Indian government will be hoping cheaper AI models don’t end up displacing low-cost jobs.

— CNBC’s Michael Bloom contributed reporting. In case you were wondering, DeepSeek-R1 did not.

Cutting deficit or raise spending? India’s finance minister faces a tough choice in crafting the annual budget, which is set to be unveiled on Feb. 1. CNBC’s Lim Hui Jie and Anniek Bao report on the challenges for Nirmala Sitharaman as the budget comes against the backdrop of a growth slowdown in the world’s fifth-largest economy, weak domestic demand, a depreciating rupee and rising global uncertainties.

Foreign investors are fleeing India’s stock market. Yet analysts say it’s a “healthy correction.” India’s benchmark stock indexes the Nifty 50 and Sensex are hovering at more than seven-month lows, firmly in correction territory since their September high. Some point to lofty valuations, others say profit booking as reasons behind the slide.

India is a “compounding machine.” Investor interest in India waned at the end of 2024 because of a pullback in Indian equities during that period. One portfolio manager, however, remains bullish on the country. The dip in the market is a buying opportunity, he says, and names three Indian stocks to buy for 2025. [For subscribers only]

Indian stocks are showing some signs of recovery after its prolong tumble. The Nifty 50 index has risen by 0.7% so far this year. Yet the benchmark is lower by 1.7% this year.

The benchmark 10-year Indian government bond yield has tumbled this week to 6.67% alongside global peers.

On CNBC TV this week, Neelkanth Mishra, chief economist of Axis Bank, said the Indian rupee had been “unduly” stable over the past few two years due to the Reserve Bank of India’s policy. Mishra suggested the rupee has lasted longer than necessary and has resulted in a weakening of the currency to all-time lows against U.S. dollar.

Meanwhile, emerging markets serving as ‘bridges’ to trade with China will be hit ‘pretty hard’ by U.S. President Donald Trump, according to portfolio manager Fergus Argyle of EFG New Capital. Argyle also explains why his emerging markets fund is not invested in either China and Vietnam. He says he prefers markets such as Mexico and India, as a form of his China plus one strategy.

Aside from India’s budget, inflation readings for the U.S., euro zone and Tokyo are in focus next week, while Big Tech reports earnings. Dr Agarwal’s Health Care, an eye hospital, lists on Wednesday.

January 31: U.S. personal consumption expenditures index for December, Tokyo consumer price index for January, Exxon Mobil earnings

February 1: India budget

February 3: Euro zone consumer price index flash for January, India HSBC Manufacturing PMI final for January, U.S. ISM Manufacturing PMI for January, China Caixin manufacturing PMI for January, Bank of Japan summary of opinions

February 4: Alphabet earnings

February 5: Dr Agarwal’s Health Care IPO, India HSBC Services PMI final for January, U.S. ISM Services PMI for January, China Caixin Services PMI for January

February 6: Bank of England interest rate decision, Amazon earnings