Nvidia (NVDA) Stock Falls: Trump Tariffs & China Export Concerns Drive Shares Lower

TLDR

• Nvidia stock dropped 3% Tuesday, extending losses following Monday’s 9% decline
• Trump administration imposed new tariffs: 25% on Canadian/Mexican imports and 10% on Chinese imports
• Potential tightening of technology export controls to China threatens Nvidia’s revenue (15% of business)
• Analysts maintain Buy ratings despite concerns over AI restrictions and tariff impacts
• Commerce Secretary Howard Lutnick signaled a hard-line stance on technology sales to China

Nvidia shares continued their downward trend on Tuesday, falling as much as 3% before trimming losses. This decline follows Monday’s steep 8.7% drop that brought the stock to its lowest level since September.

The semiconductor giant’s stock has now fallen more than 10% over the past five trading sessions. The latest pressure comes from the Trump administration’s new tariff announcements.

President Donald Trump imposed 25% tariffs on Canadian and Mexican imports on Tuesday. He also added a 10% duty on Chinese imports.

While semiconductors aren’t directly affected by these new tariffs, they could still face indirect consequences. Bernstein analyst Stacy Rasgon noted in a February analysis that the duties would affect imports of data processing equipment, such as servers using AI chips.

This connection is particularly relevant for Nvidia. Contract manufacturer Foxconn is building the world’s largest factory for assembling servers with Nvidia’s Blackwell AI chips in Mexico, one of the three countries hit by tariffs.

Higher prices for these products could reduce demand for Nvidia’s chips. This indirect effect adds another layer of concern for investors already watching the stock closely.

Monday’s nearly 9% decline came after a Wall Street Journal report raised concerns about Nvidia’s latest Blackwell AI GPUs reaching China despite export controls. This news reignited investor fears about further tightening of US trade restrictions.

Trade Restrictions

The possibility of stricter technology export controls to China poses a major threat to Nvidia. The Chinese market accounts for approximately 15% of the chipmaker’s business.

Commerce Secretary Howard Lutnick has taken a firm stance on technology sales to China. During his confirmation hearing, Lutnick specifically mentioned Nvidia’s chips being used by Chinese AI firm DeepSeek.

“It’s got to end,” Lutnick stated, according to The Economist’s reporting. His comments signal a potentially tougher approach to export restrictions.

The administration is considering two options that could impact Nvidia’s operations. Officials may further restrict sales of specialized AI chips to China, potentially including the H20.

The H20 is a scaled-down GPU that Nvidia created specifically for the Chinese market after previous export controls went into effect. According to Dylan Patel, an AI and semiconductor research expert at SemiAnalysis, Nvidia has suspended H20 production in anticipation of new restrictions.

This comes despite manufacturing over 1 million units in the nine months leading to January. The second approach involves enforcing the framework for AI Diffusion.

This rule was introduced during the final days of the Biden administration. It aims to prevent Chinese firms from accessing advanced GPUs through third countries.

Nvidia previously called this rule “misguided” when it was announced. The company argues that imposing restrictions on over 150 countries risks alienating allies and potentially driving them toward Chinese alternatives like Huawei’s AI chips.

Despite these challenges, Nvidia CEO Jensen Huang met with Trump at the White House at the end of January. The meeting suggests the company is working to maintain open communication with the administration.

Bernstein’s Rasgon noted in a Tuesday report that “NVDA’s China sales, while reaching record levels (~$17B in FY25), are at the lowest percentage of revenue (13%) in the last 10 years.” This reduced exposure could soften the blow of any future tightening of export controls.

Both Bernstein and Citi analysts maintained their Buy ratings on Nvidia stock despite the recent volatility. Rasgon wrote that “worries that the AI trade is ‘over’ feel a little premature to us, and Nvidia’s valuation is getting increasingly attractive.”

He maintained his $185 price target on the stock. Citi analyst Atif Malik similarly kept his Buy rating.

Malik noted, “While risk-reward looks attractive on the stock with stock trading below historical troughs, we believe investors are looking for the clearance event on the overhang from the AI restrictions and tariff impact to gross margins.”