Nvidia shares slump as Trump tightens export controls
Confirmation that its H20 AI chips will need a license to be exported to China has hurt Nvidia’s shares, after a volatile two weeks following the announcement of sweeping tariffs on US imports
Nvidia’s shares are enduring a challenging year, down 16.5% since the start of January, as of close on 15 April. President Donald Trump’s tariff regime has added huge volatility to Nvidia’s share price.
The period since Trump’s ‘Liberation Day’ (2 April) tariffs were announced has seen huge volatility in Nvidia’s stock. Having closed at $110.42 before the announcement, Nvidia’s shares hit a low of $86.62 on 7 April – 21.6% below their pre-tariff close.
As of close on 11 April, though, Nvidia’s shares had recovered these losses and were trading fractionally higher than they had prior to the initial tariff announcements.
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All that said, the stock is down year to date. The late rally in the week to 11 April was largely brought about by optimism for a semiconductor exemption to higher-rate tariffs, which may not actually materialise.
Nvidia (NASDAQ:NVDA) – for years one of the most popular stocks on the market – has endured a torrid run through 2025 so far. Nvidia’s share price decline has also brought the S&P 500 down, given that it has at various points in recent years been the world’s largest company by market capitalisation.
On top of multiple headwinds that Nvidia, like its Magnificent Seven colleagues, has had to contend with through the first quarter, Nvidia’s shares endured a further hit following ‘Liberation Day’, when US president Donald Trump announced his tariff regime for the US’s trading partners.
“While semiconductors are currently exempt from some tariffs, the broader market reacted negatively due to continued uncertainty, growth slowdown implications and potential retaliatory measures from affected countries,” said Lale Akoner, global market analyst at trading platform eToro.
“The semiconductor industry especially faces uncertainty as companies gauge the impact of these tariffs on their operations and supply chains.”
The escalating trade war between the US and China threatens to catch Nvidia in its crosshairs.
On 15 April, Nvidia confirmed that exports of its H20 GPU to China would now require a license, and that charges associated with its H20 products would amount to $5.5 billion in the current quarter (which ends 27 April 2025).
Nvidia’s share price fell 6% in after-hours trading on the news, and opened 6.8% below its 15 April close the following day.
“This disclosure is a clear sign that Nvidia now has massive restrictions and hurdles in selling to China,” says Dan Ives, global head of technology research at Wedbush Securities. “The financial impact is relatively small, but the strategic blow is the focus of the market as Nvidia now has massive blockades going after the China market.”
Last quarter, Nvidia’s net income totalled $22.1 billion. Wedbush estimates that China accounts for approximately 10% of Nvidia’s revenue.
How will reciprocal tariffs impact Nvidia?
Besides specific export controls, Nvidia also risks being hit by tariffs on any imports into the US.
While semiconductors were exempt from the initial round of tariffs, there is a lot of uncertainty over how the tariff regime will impact Nvidia in the long run. This has been exacerbated by Trump’s mixed messaging on the subject of semiconductor tariffs.
On Friday 11 April, semiconductor chips – along with smartphones and laptops – were exempted from reciprocal tariffs, implying that they would be subject to the 10% baseline rate on all imports to the US.
However, any optimism that Nvidia might be spared higher tariffs on its imports didn’t survive the weekend. Trump announced on his social media network, Truth Social, that rather than an exemption, the Friday announcement simply referred to semiconductors being moved to a different tariff “bucket”.
“We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations,” Trump posted. “What has been exposed is that we need to make products in the United States, and that we will not be held hostage by other Countries, especially hostile trading Nations like China.”
Commerce secretary Howard Lutnick also confirmed in an interview with ABC News that an industry-specific tariff model was on its way.
These “sector tariffs” will not be “available for negotiation”, according to Lutnick. “They are just going to be part of making sure we re-shore the core national security items that need to be made in this country, whereas virtually all semiconductors are made now in Taiwan, and they’re finished in China.”
“Around 90% of the world’s most advanced semiconductors, including mobile processors, AI GPUs, and high-performance computing chips, are manufactured in Taiwan by Taiwan Semiconductor Manufacturing Co (TSMC),” says Akoner. As such, she says any potential industry tariffs have “significant implications for Nvidia”.
The stated objective of tariffs in general is to encourage manufacturers to base production in the US. With semiconductors holding such strategic significance in the era of AI, there are few companies that the US government would like to onshore its operations as much as Nvidia.
Nvidia has already taken steps to do so. It was one of the cornerstone businesses behind Stargate, Trump’s marquee AI initiative announced soon after his inauguration. On 20 March CEO Jensen Huang told the FT that the company was going to invest hundreds of billions of dollars into strengthening its US supply chain over the next four years.
However, the chances of Nvidia relocating its entire operation to the US in quick time are slim, especially given its reliance on TSMC.
TSMC has itself been making efforts to shift operations from its eponymous homeland to the US, having announced $100 billion of investment into three new production facilities (fabs) in the US, on top of its ongoing Phoenix, Arizona operation.
Taiwan Semiconductor Manufacturing Co. plans to invest an additional $100 billion in US plants that will boost its chip output on American soil and support President Donald Trump's goal of increasing domestic manufacturing.
(Image credit: Rebecca Noble/Bloomberg via Getty Images)
Again, though, uprooting an entire production ecosystem isn’t easy.
“Such transitions require significant time and investment,” says Akoner.
In the meantime, tariffs on semiconductor components, like those TSMC produces, could raise Nvidia’s costs.
“These increased costs may lead to higher prices for customers and hit the chipmakers’ profit margins,” says Akoner.
Are Nvidia’s shares good value?
The hefty valuation of Nvidia’s shares has given plenty of investors pause for thought over the last two years, but it has, in fairness, come down substantially from the 100-times trailing earnings that the stock has reached during its run.
Following its recent downturn, Nvidia stock now trades at 38.16 times trailing earnings and 25.00 times projected earnings, according to data from stockanalysis.com (as of US market close on 15 April).
Derren Nathan, head of equity research, Hargreaves Lansdown, thinks Nvidia’s share price decline has been unwarranted, and that the stock is still an appealing prospect.
“We think it’s been caught up in the wider pivot towards more defensive sectors,” he says.
“It’s not just the chips that make Nvidia’s product so appealing: the CUDA software platform that enables users to optimise the hardware is key. AI has the scope to transform practically every industry, and Nvidia is proving to be a key partner in everything from healthcare through to self-driving vehicles.”
However, Nathan acknowledges “concerns about trade restrictions and the scale of future demand for Nvidia’s powerful computer processors” as well as the fact that Nvidia’s ability to scale is dependent on its partners.
As always when considering buying shares, it is important that investors conduct their own thorough research and consider the downside risks.
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Dan is a financial journalist who, prior to joining MoneyWeek, spent five years writing for OPTO, an investment magazine focused on growth and technology stocks, ETFs and thematic investing.
Before becoming a writer, Dan spent six years working in talent acquisition in the tech sector, including for credit scoring start-up ClearScore where he first developed an interest in personal finance.
Dan studied Social Anthropology and Management at Sidney Sussex College and the Judge Business School, Cambridge University. Outside finance, he also enjoys travel writing, and has edited two published travel books.
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