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Trade Wars, Emerging Markets and DeepSeek: 3 Stocks to Watch
Urmimala Biswas
5 min read

In This Article:

Since the Republicans began their term on Jan. 20, emerging market investors have been navigating a complex landscape shaped by U.S. policy shifts. Trump 2.0’s list of proposed tariffs and immigration policy changes has started to make a significant impact on forex and global geopolitical dynamics.

Emerging countries with significant trade exposure to the United States, such as Mexico and China, are likely to be hit the most by this tariff plan. While Mexico has been threatened with a 25% tariff, Trump has proposed a 10% tariff on Chinese imports, a moderated stance compared to earlier threats of 60%. However, China’s recent breakthrough in AI with its DeepSeek AI Chatbot, which wiped billions off the valuation of U.S. tech companies in a single day, highlights a more fraught and complex trajectory for trade relations between the world’s two largest economies.

This environment is prompting investors to reassess their strategies, with some considering reallocating investments to markets less affected by U.S. trade actions. For instance, with growing U.S.-China trade tension, India’s geopolitical position seems favorable for a safer investment. Further, India’s market is largely domestically driven, making it less exposed to U.S. trade policies. Meanwhile, Brazil appears poised to gain from any trade tensions that redirect demand for agricultural products from Mexico.

The iShares MSCI Emerging Markets ETF rose 1.1% immediately following the policy announcements last week.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Here, we present three emerging market stocks,MercadoLibre MELI, Yatra Online YTRA and WNS WNS, which are expected to gain in 2025, capitalizing on their solid prospects.

Emerging Market Trade Scenario at a Glance

The Trump administration's inclination toward protectionism in the form of “America First,” particularly through the imposition of tariffs, is a primary concern for emerging markets (EMs). The U.S. dollar, in fact, started strengthening following the election, a trend that is strongly impacting EMs, especially those with substantial dollar-denominated debt. Meanwhile, geopolitical factors continue to play a significant role in shaping investor sentiment.

It is quite clear that Trump’s second term has a far more challenging transactional strategy for China compared to the previous one. However, DeepSeek's emergence as a direct competitor to OpenAI's latest model sends a clear signal about China's ability to innovate and excel, even under the constraints of U.S. export restrictions. It underscores China's determination to achieve technological self-reliance and advance its global influence in critical industries like artificial intelligence. From an investment perspective, the implications are significant. The success of DeepSeek could attract a wave of funding into China's AI ecosystem, further fueling innovation and competition.

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