Here’s How Trump’s “Liberation Day” Tariffs Could Impact Chip Giant Nvidia (NVDA)
All eyes are on the tariff announcements that U.S. President Donald Trump is expected to make at 4 p.m. EST on April 2, a day which he refers to as “Liberation Day,” as he believes that these tariffs will free the country from dependence on foreign goods. Here, we will look at how the potential tariffs on several countries could impact chip giant Nvidia (NVDA). Notably, NVDA stock has declined 18% so far this year amid tariff threats, chip export restrictions, and concerns over increased competition in the AI chip market.
Don’t Miss Our End of Quarter Offers:
According to White House spokesperson Karoline Leavitt, reciprocal tariffs on countries that impose duties on U.S. goods would be effective as soon as Trump announces them, while a 25% tariff on auto imports will be effective from April 3. Trump intends to address trade balances via these tariffs and encourage domestic production.
What the “Liberation Day” Tariffs Could Mean for Nvidia Stock
In Fiscal 2025, Nvidia generated 53% of its revenue from sales outside the U.S. Retaliatory tariffs and the escalation of trade wars could weigh on the company’s business.
The Trump administration recently added many Chinese companies to an export blacklist, citing national security concerns. U.S. chip companies like Nvidia will be required to get government approval if they intend to sell chips to these Chinese companies. Any further restrictions or tariffs announced by Trump on China on the “Liberation Day” could weigh on Nvidia’s revenue from this key market. According to Main Street Data, China contributed $17.1 billion or 13% of Nvidia’s Fiscal 2025 revenue of $130.5 billion.
Meanwhile, in its Fiscal 2025 annual report, Nvidia mentioned that its supply chain is mainly concentrated in the Asia-Pacific region. Notably, the company is dependent on foundries, such as Taiwan Semiconductor Manufacturing Company Limited (TSM), or TSMC, and Samsung Electronics Co. (SSNLF), for the production of its semiconductor wafers. While TSMC announced a $100 billion investment in the U.S. to build three new fabs and two advanced packaging facilities, any decision by Trump to slap tariffs on Taiwan could adversely impact Nvidia’s supply chain. According to TipRanks’ Risk Analysis Tool, Production Risks account for 17.4% of NVDA’s overall risks, higher than the sector average of 12.9%.
Aside from the potential disruption to Nvidia’s supply chain and a possible rise in costs, a trade war with Taiwan would also hit the maker of advanced GPUs (graphic processing units) on the revenue side, as it is the second-largest international market for the company and accounted for around 16% of the overall revenue in Fiscal 2025.
Meanwhile, Bank of America analyst Vivek Arya has cautioned that the uncertainty related to the U.S. export rules for AI chips, also called the AI Diffusion Rule, could cause persistent volatility in NVDA stock until the “Liberation Day,” when the market begins to price in the rule’s actual impact. The AI Diffusion Rule, which aims to limit the export of powerful AI chips, is expected to take effect on May 15.
Is NVDA Stock a Buy, Sell, or Hold?
Despite the ongoing challenges, Wall Street is currently bullish on Nvidia stock based on the robust demand for its advanced GPUs to build AI models. NVDA stock scores a Strong Buy consensus rating based on 39 Buys and three Holds. The average NVDA stock price target of $176.54 implies 60.3% upside potential from current levels.
Disclaimer & DisclosureReport an Issue