US President Announces New Tariffs, Tech Stocks Plummet
Tariffs and Their Impact on Tech Giants
U.S. President Donald Trump announced a series of new tariffs on Tuesday, sending stock prices of numerous tech giants plummeting. The tariffs, which include individual “reciprocal” tariffs on several nations and a baseline 10% levy on all imports, are expected to have a significant impact on the tech industry.
- Goods from Vietnam are now subject to a 46% reciprocal tariff
- 32% on imports from Taiwan
- 26% from India
China, which has been a major target of the tariffs, faces a 34% reciprocal tariff, in addition to the 20% tariff that has been in effect since March.
Tech Stock Reaction
By Thursday’s close, NVIDIA’s stock had fallen by nearly 8%, while Amazon and Meta dropped by 9% each, according to CNBC. Apple led the declines, tumbling 9% – its steepest drop since the COVID-induced market sell-off in March 2020.
Shares of Microsoft and Alphabet both fell about 2% and 4%, respectively. The Nasdaq Composite Index, a benchmark heavily weighted toward tech stocks, dropped by almost 6%.
Company-Level Impact: Apple and NVIDIA
Apple products, primarily manufactured in China, India, and Vietnam, are likely to become more expensive as the company passes increased import costs on to U.S. consumers. Morgan Stanley analysts estimate that Apple’s profits could take a 7% hit in 2026 due to its annual costs rising by $8.5 billion.
NVIDIA, a U.S. chipmaker giant, should be somewhat shielded from the impact due to Trump’s exemption on semiconductors, sparing it from the 32% tariff on chips manufactured in Taiwan by TSMC. However, it remains unclear whether the semiconductor exemption will also cover the 10% baseline tariff on all imports, and rumors suggest that new tariffs on chips are coming soon.
Tariffs Could Disrupt AI Innovation
The U.S. relies on China and Taiwan for approximately 80% of its foundry capacity for 20 to 45nm chips and about 70% for 50 to 180nm chips. Tech firms may attempt to shift sourcing to reciprocal tariff-free countries, but many will pass the additional costs to consumers instead.
Separately, Trump has revoked tariff exemptions on Chinese imports valued at $800 or less. This is particularly bad news for Amazon as many of the low-price goods listed on its marketplace are from Chinese sellers.
China’s Potential Retaliation
Analysts are concerned about potential retaliatory action from China, as the country’s Ministry of Commerce said it would “resolutely take countermeasures” if the U.S. does not “immediately cancel” its tariffs. Dan Ives of Wedbush Securities said in a note that tariffs from China could “constrict the supply chain for next-generation Nvidia chips/hardware,” disrupting AI innovation.
Conclusion
The recent tariff announcement by the U.S. President is expected to have a significant impact on the tech industry, particularly on companies that rely heavily on imports from China and other countries. The tariffs could lead to increased costs for consumers, disrupt supply chains, and potentially hinder innovation in the AI sector.
FAQs
- What are the new tariffs announced by the U.S. President? The tariffs include individual “reciprocal” tariffs on several nations and a baseline 10% levy on all imports.
- Which countries are affected by the tariffs? Goods from Vietnam are subject to a 46% reciprocal tariff, while imports from Taiwan are subject to a 32% tariff, and imports from India are subject to a 26% tariff.
- How will the tariffs affect tech stocks? Tech stocks, including NVIDIA, Amazon, and Meta, have seen significant declines in response to the tariff announcement.
- What is the impact on Apple and NVIDIA? Apple products are likely to become more expensive due to increased import costs, while NVIDIA may be shielded from the impact due to the exemption on semiconductors.
- What is the potential impact on AI innovation? The tariffs could disrupt the supply chain for next-generation Nvidia chips/hardware, potentially hindering innovation in the AI sector.
