Nvidia (NVDA) stock dropped as much as 5% in early trading Monday, extending the prior week’s declines as investors reacted to Trump’s new tariffs.

US president Donald Trump on Saturday announced an additional tariff of 10% on imports from China and 25% on those from Mexico and Canada to the apparent surprise of investors, who had underpriced such risk. The tech heavy Nasdaq (^IXIC) was off more than 2% Monday morning.

Nvidia’s stock was already reeling from news last week that the Trump administration was considering further tightening rules on exports of Nvidia chips to China. Bloomberg, citing unnamed sources, said the administration officials were in the early stage of discussions to expand restrictions on exports of Nvidia’s H20 chips, a version of its Hopper AI chips designed specifically for China to comply with US export rules. Some 17% of Nvidia’s 2024 sales came from China.

The report came after a new AI model released by Chinese firm DeepSeek called into question the mammoth spending from Big Tech on artificial intelligence infrastructure, sparking a massive selloff in the tech sector. Nvidia fell 17% in a single day on the news, shaving $589 billion off the AI chipmaker's market cap — the largest single-day loss in stock market history.

PATRICK T. FALLONMANDEL NGAN via Getty Images

While semiconductors aren’t directly affected by the new tariffs, Bernstein analyst Stacy Rasgon wrote in a Monday research note that the duties would affect imports of data processing equipment, such as servers using AI chips. Higher prices of those products could reduce demand and have an indirect effect on chip sales. Rasgon points to the fact that the US imported $39 billion worth of data processing equipment such as PCs and servers from China in 2023 and $28 billion from Mexico. Contract manufacturer Foxconn is building the world’s largest factory for assembling servers with Nvidia's Blackwell  AI chips in Mexico.

The tariff news over the weekend sent other chip stocks down, too. Nvidia rival Advanced Micro Devices (AMD) and Qualcomm (QCOM) dropped about 2%, while Micron (MU) and Broadcom (AVGO) sank nearly 3%.

Nvidia CEO Jensen Huang met with Trump at the White House last Friday. A source familiar with the matter told Reuters the two discussed DeepSeek.

Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.

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