Nvidia Shares Plummet Amid Trump's Tariff Threats and Potential Impact on AI Chip Industry
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CNBC Daily Open: Nvidia's slump and Trump's renewed tariffs rocked markets
Taken from CNBC's Daily Open, our international markets newsletter -- Subscribe today U.S. President Donald Trump said Thursday he would give tariffs on Canada and Mexico, which are temporarily paused, the go-ahead, while separately threatening on Wednesday to slap a 25% levy on the European Union. Those are some of the U.S.' closest allies and biggest trade partners. Expect geopolitical friction and economic fallout if the tariffs are implemented. Some of the repercussions might have begun already. Jobless claims in the U.S. for the week ended Feb. 22 rose more than expected and were the highest since early October. Big Tech companies, such as Google, Meta and Microsoft, have announced layoffs this year -- while such cost-cutting measures may not have been a direct response to tariffs, they are an early sign of what things could look like when companies try to deal with increased import prices. Nvidia might also be staring down the barrel of a gun. Most of Nvidia's advanced artificial intelligence chips are manufactured by TSMC in Taiwan. Trump, on his campaign trial, has complained that the island stole the U.S.' chip business, and said he would impose tariffs on chips from Taiwan. Shares of Nvidia plummeted Thursday after the chipmaker announced earnings Wednesday, wiping out billions in market capitalization. If tariffs on Taiwan are implemented as well, the picture will look much uglier, and not just for the chipmaker.
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CNBC Daily Open: Markets rocked as Nvidia slumps and Trump confirms tariffs
Taken from CNBC's Daily Open, our international markets newsletter -- Subscribe today U.S. President Donald Trump said Thursday he would give tariffs on Canada and Mexico, which are temporarily paused, the go-ahead, while separately threatening on Wednesday to slap a 25% levy on the European Union. Those are some of the U.S.' closest allies and biggest trade partners. Expect geopolitical friction and economic fallout if the tariffs are implemented. Some of the repercussions might have begun already. Jobless claims in the U.S. for the week ended Feb. 22 rose more than expected and were the highest since early October. Big Tech companies, such as Google, Meta and Microsoft, have announced layoffs this year -- while such cost-cutting measures may not have been a direct response to tariffs, they are an early sign of what things could look like when companies try to deal with increased import prices. Nvidia might also be staring down the barrel of a gun. Most of Nvidia's advanced artificial intelligence chips are manufactured by TSMC in Taiwan. Trump, on his campaign trial, has complained that the island stole the U.S.' chip business, and said he would impose tariffs on chips from Taiwan. Shares of Nvidia plummeted Thursday after the chipmaker announced earnings Wednesday, wiping out billions in market capitalization. If tariffs on Taiwan are implemented as well, the picture will look much uglier, and not just for the chipmaker.
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Nvidia's stock tumbles following earnings report, while Trump's renewed tariff threats on allies and Taiwan raise concerns for the AI chip industry and broader tech sector.
Nvidia's Stock Plummets Amid Earnings Report and Tariff Concerns
Nvidia, the leading AI chip manufacturer, experienced a significant drop in its stock value on Thursday, following its earnings announcement on Wednesday. The plunge wiped out billions in market capitalization, sending shockwaves through the tech industry
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.Trump's Renewed Tariff Threats
Adding to the market turbulence, U.S. President Donald Trump announced plans to reinstate tariffs on Canada and Mexico, which had been temporarily suspended. He also threatened to impose a 25% levy on the European Union
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. These moves targeting some of America's closest allies and largest trading partners have raised concerns about potential geopolitical friction and economic repercussions.Potential Impact on AI Chip Industry
Trump's campaign rhetoric has taken aim at Taiwan, accusing the island of "stealing" U.S. chip business. He has proposed imposing tariffs on chips from Taiwan, a move that could significantly impact Nvidia and the broader AI industry
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. This is particularly concerning as most of Nvidia's advanced AI chips are manufactured by TSMC in Taiwan.Early Signs of Economic Strain
While not directly linked to the tariff threats, recent economic indicators and corporate actions suggest potential challenges ahead:
- U.S. jobless claims for the week ending February 22 rose more than expected, reaching the highest level since early October
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. - Major tech companies, including Google, Meta, and Microsoft, have announced layoffs this year
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These developments may foreshadow the difficulties companies could face when dealing with increased import prices resulting from tariffs.
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Broader Implications for the Tech Sector
If Trump's proposed tariffs on Taiwan are implemented, the consequences could extend far beyond Nvidia. The entire tech sector, particularly companies relying on advanced AI chips, may face significant challenges
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. This situation underscores the delicate balance between geopolitical decisions and their impact on cutting-edge technologies and global supply chains.Market Reaction and Future Outlook
The combination of Nvidia's earnings report and the looming threat of tariffs has created a perfect storm in the markets. Investors are closely watching how these factors will influence not only Nvidia but also the broader AI and tech industries. The potential for increased costs, supply chain disruptions, and geopolitical tensions presents a complex landscape for companies and investors alike
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.As the situation unfolds, stakeholders in the tech industry will need to carefully navigate the intersection of technological innovation, international trade policies, and geopolitical relationships. The coming months may prove crucial in determining the long-term trajectory of the AI chip industry and its global supply chains.
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