Nvidia Stock Falls Amid Trump New Tariffs and AI Market Concerns

Nvidia (NVDA) stock tumbled as much as 5% in early trading on Monday, continuing its decline from last week as investors reacted to Donald Trump’s newly announced tariffs on China, Mexico, and Canada. The Nasdaq Composite (^IXIC), heavily weighted with tech stocks, also fell over 2% as market fears grew.

Nvidia’s Stock Hit by Trade War and AI Market Worries

While Nvidia managed to pare some losses, ending the day down 2.8%, the ongoing US-China trade tensions and AI market uncertainties have shaken investor confidence.

🚨 Key factors impacting Nvidia’s decline:
✅ New Tariffs: Trump’s 10% tariff on Chinese imports and 25% on Mexico and Canada raised concerns about rising costs for AI servers and data processing equipment, indirectly affecting semiconductor sales.
✅ China Export Restrictions: Reports last week suggested the Biden administration is considering stricter export controls on Nvidia’s H20 AI chips, which were specifically designed to comply with US regulations for China.
✅ DeepSeek AI Threat: A powerful new AI model by Chinese firm DeepSeek raised doubts about Big Tech’s aggressive spending on AI infrastructure, leading to Nvidia’s historic 17% single-day drop last week—erasing $589 billion in market cap.

AI Chip Demand and Global Manufacturing Impact

Bernstein analyst Stacy Rasgon noted that while semiconductors aren’t directly impacted by the new tariffs, higher import costs for AI data centers and servers could reduce overall demand for chips. The US imported $39 billion worth of data processing equipment from China in 2023 and another $28 billion from Mexico, making this a critical issue for Nvidia and its supply chain.

Foxconn, Nvidia’s key contract manufacturer, is currently building the world’s largest AI server assembly plant in Mexico, which could face higher costs due to the tariffs.

Chip Sector Sell-Off: Broad Market Decline

Nvidia wasn’t alone in feeling the heat. The tariff announcement triggered a broader sell-off in semiconductor stocks, with:
🔻 Advanced Micro Devices (AMD) and Qualcomm (QCOM) falling 2%
🔻 Micron (MU) and Broadcom (AVGO) dropping nearly 3%

Meanwhile, Nvidia CEO Jensen Huang met with Trump at the White House on Friday, where they reportedly discussed the impact of DeepSeek on the AI industry.

As the AI sector faces growing geopolitical challenges, investors remain on edge about how Nvidia will navigate trade policies, market shifts, and evolving AI competition. 🚀📉