What’s going on here?

The US president announced The Stargate Project: a global tech partnership set to invest half a trillion dollars into American AI infrastructure and create 100,000 jobs.

What does this mean?

Not content with replacing romantic partners, therapists, and doctors for millions, ChatGPT’s creator OpenAI is teaming up with Japanese firm SoftBank, US tech company Oracle, and United Arab Emirates-backed investor MGX to form the alliance. Stargate already counts chipmakers Arm and Nvidia as “technology partners”, along with OpenAI’s biggest investor Microsoft. And the project will keep scouting for new investors, too. Through the joint venture, the four firms plan to invest up to $500 billion into AI infrastructure across the US over the next four years.

Why should I care?

For markets: Everything’s bigger in Texas.

Stargate has already started work on a data center project in Texas – and it plans to expand construction into other states. Remember, tech companies have been funneling cash across the entire AI ecosystem, investing heavily in the infrastructure needed to create, train, and run in-demand models. That’s because the US can’t hold pole position in the AI race without enough processing power to keep fueling increasingly smart and scaled-up systems. The flurry to address the infrastructure bottleneck has also led to a comeback for nuclear power – a reliable source of clean energy. And it’s been filling the order books of companies supplying equipment to data centers too.

The bigger picture: Keep your friends close and the president closer.

The top dogs of Amazon, Meta, Apple, Google, and Tesla filled coveted seats at the presidential inauguration this week, eager to cement their relationships with the new administration. The president’s decisions can affect businesses for better or worse – not least in the tech industry, which has seen a number of high-profile regulatory cases brought against it lately. So if these leaders can keep the head honcho sweet, their shareholders might see the benefit.

What’s going on here?

After threatening Mexico and Canada with 25% tariffs on his first day back in office, the newly inaugurated US president – seemingly eager to keep the headline-writers busy – used his second to extend the warning to China and Europe.

What does this mean?

Europe may soon be slapped with new tariffs: the president criticized the fact that the region exports $350 billion more to the US than it imports. China could be facing a 10% tax – although officials have been asked to evaluate its economic relationship with the US, suggesting the figure could still be in flux. Economists, for their part, are concerned that 10% could rise to as high as 60% on all Chinese imports into the US.

Why should I care?

For markets: Careful what you wish for.

Those trading partners would almost certainly retaliate by increasing tariffs on US exports – and with such hulking numbers on the table, they probably wouldn’t wait around for authorization from the World Trade Organization before doing so. That’s – obviously – not what the US economy needs right now. Not only would pricier imports lead to higher prices for American buyers, risking rising inflation and business-bruising interest rate hikes, but pricier US exports would also put prospective buyers off. So as it’s generally sensible to avoid trade wars for the sake of the economy, the president may just be using such hefty tariff talk to bring world leaders to the negotiating table.

The bigger picture: Talk about an electric relationship.

The US and Europe share the biggest trade and investment relationship in the world, so both sides would prefer to find a mutually beneficial compromise. The US president has suggested that Europe could sidestep higher taxes by buying more American energy and increasing defense spending. But that’s a tough sell for a region made up of many different countries – each with their own priorities and already-high government debt levels.