What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ:NVDA) fell 7.8% in the afternoon session after China imposed a 34% tariff on all U.S. imports amid escalating trade war tensions. This was especially rough for the US chipmakers because a big chunk of their business leans on demand out of China. The new tariffs not only threaten to erode profit margins but also risk reducing market share.
Adding to the uncertainty, the Trump administration signaled the possibility of further regulatory action against the sector. Although semiconductor firms were notably excluded from the broad tariffs unveiled on April 2, 2025, their exclusion raised concerns that targeted restrictions could still be forthcoming.
The shares closed the day at $94.28, down 7.4% from previous close.
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What The Market Is Telling Us
Nvidia’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock dropped 6% on the news that stocks pulled back (Nasdaq -1.5%, S&P 500 -1.2%) amid fresh concerns about trade tariffs. The pullback followed comments from President Trump clarifying the scope of his administration's 25% tariffs on Venezuela. He noted that it would apply to any country that does business with Venezuela. For example, 25% is on top of the already-in-place 20% tariff on China because China imports oil from Venezuela, which could translate to a 45% tariff on some Chinese goods. This announcement could significantly raise the operating costs for affected companies and institutions.
Also, the Financial Times reported that Chinese regulators prevented the country's tech companies from using Nvidia's H20 chip. The chip was designed to meet U.S. trade ban rules, but it seemed Chinese regulators were worried they could breach energy-efficiency rules.
Adding to the worries, there were also reports that the U.S. had added more Chinese companies to its trade blacklist, citing national security concerns. As a result, these companies would now need government approval to purchase American technology. Among those affected were tech firms that depended heavily on advanced chips made by U.S. manufacturers, raising concerns about the US chip makers' ability to maintain strong sales in the Chinese market.
Nvidia is down 32.1% since the beginning of the year, and at $93.93 per share, it is trading 37.1% below its 52-week high of $149.43 from January 2025. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $13,999.
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