Artificial intelligence and trade tariffs are emerging as major deflationary headwinds for the US economy. Here's what that means: consumer prices should trend downward, but here's the catch—financial markets and asset valuations could swing dramatically in response.

The mechanics are straightforward. AI boosts productivity and reduces costs across sectors. Tariffs create friction initially, but over time push companies toward efficiency gains. Both forces compress margins and price points.

For crypto and digital assets, deflation changes the game. Lower inflation typically weakens traditional bonds and reduces the scarcity premium that inflation provides. Investors hunt for returns elsewhere. Meanwhile, deflationary environments can amplify volatility in risk assets—crypto included.

We spoke with industry observers about scenarios where AI-driven deflation takes hold. The consensus view? Asset repricing won't be smooth. Expect sectoral rotation, yield compression, and potentially flight-to-quality dynamics that could reshape portfolios across the board.