Nvidia shares fell over 4% early Monday after US President Donald Trump delivered a stern message about trade tariffs. Trump said on Sunday that no country would be given any special treatment regarding tariffs.
He also signed new trade policies into effect on April 2, which he calls “Liberation Day.” This frightened investors, who had expected a softer trade stance.
Trump’s remarks set off a market-wide sell-off led by tech stocks. Shares in Tesla fell over 5%, the biggest decline for the “Magnificent Seven” tech behemoths. Already in the crosshairs of new trade restrictions, Nvidia saw its stock also tumble.
New tariffs disrupt Nvidia’s role in the AI arms race
An imminent 25% tariff from the US government on goods from Mexico and Canada directly impacts Nvidia. The company produces advanced graphics processing units (GPUs) in artificial intelligence (AI) servers. So, many of these AI servers are put together in Mexico and driven across the border into the US.
According to trade data, the US imported $43 billion in computers, including AI servers, from Mexico in 2024. The company expects new tariffs to increase the cost of such servers, which could decrease demand for Nvidia’s AI chips.
Taiwan, also a key source of Nvidia’s GPU supply, could also see the extension of trade controls. In 2024, the US imported $33 billion worth of computer parts, including Nvidia-powered printed circuit boards, from Taiwan. The tech firm’s production costs could increase if Trump hits Taiwan with more tariffs.
Nvidia gears up for major changes ahead
The short-term effects of the tariffs will take time to play out, but Nvidia is already looking ahead.
At its latest GTC conference, CEO Jensen Huang answered questions about trade restrictions, specifying that export control restrictions concerning artificial intelligence and China were the reason behind the firm’s challenges.
He acknowledged that tariffs would have “a little impact” on the company in the short term, but he also stressed that Nvidia is pursuing longer-term solutions.
One important step toward that goal is expanding production in the US. Huang cited Taiwan Semiconductor Manufacturing Company (TSMC) ‘s $100 billion investment to develop new chip factories in the United States. TSMC is a major manufacturing partner for Nvidia, and the move potentially helps mitigate overreliance on overseas factories in the future.
However, Nvidia’s stock has faced pressure in 2025. As of Monday morning, it had fallen almost 22% from the start of the year.
Before Trump made his most recent comments, analysts said the stock market had yet to fully digest the new tariffs’ impact. Now, some financial experts are cautioning that investors should also consider how these longer-term rules governing trade will inform the industry.
Even before Trump’s latest remarks, some analysts had cautioned that the market was not yet properly pricing the full effects of these tariffs. According to Josh Schafer of Yahoo Finance reports, many investors underestimated the extent and scope of Trump’s trade policies. The market now sees how serious and long-term these tariffs could be, said Henrietta Treyz, an economic policy expert at Veda Partners
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