HP Inc. (HPQ) shares plummeted 7.87% in intraday trading on Thursday, continuing a downward trend that has seen the stock lose over 16% in the past month. This sharp decline comes as the tech sector grapples with fears of an escalating tariff war and concerns about slowing economic growth.

The primary driver behind HP's stock decline appears to be the recent announcement of new U.S. tariffs, which are expected to directly impact hardware imports from China. These tariffs could significantly raise costs for both suppliers and end-users in the coming quarters, potentially hurting overall demand for PCs. The increased component prices resulting from the tariffs are likely to squeeze HP's margins, particularly in its Personal Systems segment, which includes PCs and laptops.

Despite these challenges, HP maintains a strong position in the global PC market, holding a 20.2% market share and ranking second behind Lenovo. The company has also seen growth in its PC shipments, with a 6.1% year-over-year increase in the first quarter of 2025. Additionally, HP is expanding its AI portfolio with innovative products like the HP OmniBook Ultra Flip and HP Print AI, which could help the company capitalize on the growing AI PC market. While short-term pressures remain, these factors may provide some support for HP's long-term prospects.