Article:
US markets opened sharply lower on Monday, with tech stocks leading the slide after former President Donald Trump announced plans for sweeping reciprocal tariffs, dashing investor hopes for softer trade policies. Nvidia Corporation (NASDAQ: NVDA), a key player in the artificial intelligence (AI) revolution, saw its shares tumble more than 4.5%, trading at $104.65 by mid-morning.
Trump’s Tariff Warning Shakes Markets
Speaking aboard Air Force One on Sunday, Trump referred to April 2 as “Liberation Day,” marking the rollout of reciprocal tariffs aimed at all countries, including key US trade partners like Mexico, Canada, and Taiwan. The unexpected announcement rattled investors, raising fears of a broader trade war and its potential impact on the global economy.
The former president’s comments signaled that no country would receive preferential treatment, significantly affecting tech giants reliant on global supply chains. The Nasdaq Composite tumbled in early trading, with Tesla (NASDAQ: TSLA) leading losses among the “Magnificent Seven” tech stocks, plunging over 5%.
Nvidia Takes a Hit Amid AI Supply Chain Concerns
Nvidia, the market leader in AI GPUs, faces heightened risks due to its reliance on international manufacturing hubs, particularly Mexico and Taiwan. The US is already set to impose 25% tariffs on imports from Mexico and Canada, which includes AI servers. According to US trade data, the country imported $43 billion worth of “computers” in 2024 from Mexico—a category that encompasses data center servers powered by Nvidia chips.
Higher tariffs could drive up the price of these servers, potentially softening demand for Nvidia’s AI processors. This comes at a time when AI infrastructure demand is surging, making Nvidia particularly vulnerable to price-sensitive buyers.
Adding to the pressure, Taiwan—a critical node in Nvidia’s supply chain—exports roughly $33 billion worth of computer parts to the US annually. These parts include printed circuit boards embedded with Nvidia’s GPUs, produced by Taiwan Semiconductor Manufacturing Company (TSMC). With Trump’s latest comments hinting at expanded tariffs on Taiwan, Nvidia’s costs could climb further, putting its margins at risk.
AI Stocks Hit by Broader Sell-Off
Nvidia was not alone in feeling the heat. Other semiconductor and AI-related stocks also dropped sharply. Advanced Micro Devices (NASDAQ: AMD) slipped by nearly 3%, while AI infrastructure stocks such as Super Micro Computer (NASDAQ: SMCI) faced pressure as well, given its dependency on Nvidia GPUs for its AI servers.
The market’s reaction highlights growing investor concerns over how new tariffs could stifle growth in the AI sector, which has been one of the key drivers of the current bull market. With tariffs threatening to increase hardware costs, analysts fear a potential slowdown in AI-related capital expenditures by data centers.
What’s Next for Nvidia and the Tech Sector?
While Nvidia’s fundamentals remain strong, with robust demand for its GPUs driving record revenues, trade policy uncertainty could weigh heavily on its near-term performance. Higher input costs and potential demand softness may lead to downward revisions in revenue forecasts, making the stock more volatile.
Investors will be closely watching the April 2 tariff announcement for further details, as it could significantly impact the tech sector’s profitability. With Trump’s latest rhetoric, the likelihood of escalating trade tensions has grown, adding another layer of complexity to an already fragile market environment.
Conclusion
Trump’s trade policy bombshell has sent shockwaves through the tech sector, with Nvidia at the epicenter of the sell-off. The potential for widespread tariffs on critical AI components could squeeze margins and disrupt supply chains, raising questions about the sector’s near-term growth outlook. As April 2 approaches, investors are bracing for more market turbulence, with Nvidia and other AI stocks facing increased volatility.
