Inside the Tech Tariff Catastrophe

High tariffs and export restrictions imposed by the Trump administration are snarling technology supply chains, threatening production, and forcing a dramatic shift in plans for a range of U.S. companies. And the outcome could be the opposite of what the government intends.

Tariff fears were among several factors contributing to today's steep selloff in the stock market, in addition to President Trump's comments criticizing and threatening to remove Federal Reserve Chair Jerome Powell. In mid-day trading, the Nasdaq Composite index was down 3%.

The longer that proposed tariff policies go without negotiated settlements, the bigger trouble for technology and other business. Without clear insight into the longer-term path of trade deals, executives will have trouble sourcing components, planning budgets, and figuring out where to build manufacturing facilities.

At the heart of the tech upheaval is the administration’s all-out trade war with China. In addition to the cumulative 145% tariff on imports from China, there are export restrictions on AI chips as well. As a result, tech vendors are predicting financial setbacks and uncertainty. Let’s look at a few tech firms at risk.

Apple and Qualcomm on High Alert

Top of the high-risk chart is Apple, which by most accounts relies on manufacturing in China for 80% of its products. The company also realized about 15% of its sales in “greater China” as of its most recent earnings statement for the quarter ended December 28, 2024.

Apple has shifted a sizable portion of its iPhone manufacturing to India over the past year, accounting for $22 billion worth of goods in the year ended in March 2025, according to Bloomberg. Still, the 145% cumulative U.S. tariffs on goods imported from China is likely to take a chunk out of Apple’s earnings, as it simply can’t move production out of the PRC fast enough to keep ahead of the tariffs.

Qualcomm is another large tech company at risk. Qualcomm realizes a large portion of its sales from China: For its fiscal 2024, 46% of revenues came from China, versus 25% from the U.S. Export controls could severely limit its ability to sell smartphone chips to companies such as Huawei and Xiaomi. And its reliance on TSMC for chipmaking means that if China changes its mind about the country-of-origin tariffs, Qualcomm could be hit hard.

One of Qualcomm's largest income streams, historically, is intellectual property licenses, which have dipped in recent years. Chinese vendors such as Huawei were once Qualcomm licensees, but they have pivoted to developing their own technology, a trend only likely to accelerate with the building trade war.

NVIDIA Chip Hits the No Fly List

NVIDIA was told on April 9 that its H20 chip will be subject to licensing for export to China. That chip, which accounts for several billion dollars in revenue annually for NVIDIA, was designed especially for the Chinese market due to its limited capabilities compared to other NVIDIA GPUs. With the new restriction, NVIDIA is, according to its 8K SEC filing, taking “up to approximately $5.5 billion of charges associated with H20 products for inventory, purchase commitments, and related reserves.”

AMD issued a similar statement on April 15 that it will take an $800 million charge due to restriction of its specially designed MI308 chip for the Chinese market.

The restriction on H20’s comes after NVIDIA CEO Jensen Huang apparently managed to avoid Trump restrictions on the H20 chips for China in return for a pledge to manufacture chips and entire supercomputers in the U.S. over the next few years. But attendance at a high-priced dinner with Trump at Mar-a-Lago and the manufacturing pledge only brought temporary relief from export controls.

On April 16, Huang flew to China, where on April 17 he met with Chinese Vice Premier He Lifeng and DeepSeek founder Liang Wenfeng. The purpose of the trip apparently was to hedge his bets on the Chinese market and to create a bridge for potential trade negotiations between the U.S. and the PRC. But as Bloomberg noted, U.S. Commerce Secretary Howard Lutnick is firm on curbing any chip sales to China, and there’s little sign of any break in policy.

Huang may have another agenda too. While the ultimate impact of the H20 restriction might not take an enormous dent out of NVIDIA’s overall earnings, a more dire situation could evolve from China’s side. As of now, China isn’t imposing its heavy tariffs on U.S. chips made by Taiwan-based TSMC, thanks to its definition of what is the "country of origin" in chipmaking (it's where the chips are actually fabricated). If that should change, NVIDIA and other companies that rely on TSMC to make chips, including AMD and Qualcomm, would face high import restrictions in the China market.

Other Firms in the Tariff Crosshairs

Tariffs and export controls will have a domino effect throughout the supply chain. It's been noted that hyperscaler firms such as AWS, Microsoft Azure, and Google Cloud, as well as so-called neocloud providers such as CoreWeave, will be affected by higher prices on hardware containing parts made or assembled in China. This could hinder their expansion plans.

Indeed, in an ironic twist, the costs of building out AI datacenters in the U.S., which has been a goal of the present administration, could rise to the point where buildouts slow down. Retaliation from China could include pullback on minerals crucial for making semiconductors, which could have a devastating effect on products and projects.

Ultimately, the Trump trade policies, while drawing a certain amount of manufacturing back to the States, could have a range of unwanted consequences as companies struggle to finance buildouts that depend on supply chains choked off by tariffs and export controls.

Futuriom Take: The Trump administration’s tariffs, while promising to bring tech manufacturing and datacenter buildouts back on U.S. soil, could snarl key supply chains on which those buildouts depend.