Trump's Tariffs Are Wreaking Havoc on the AI Industry He Claims to Support

Below the Belt

President Donald Trump's chaotic tariffs hit US-based AI chipmaker Nvidia's stock, as it slid over five percent when trading began on Monday before recovering by a few points.

Over the weekend, Trump announced an additional ten percent tariff on Chinese imports and 25 percent on those from Mexico and Canada, though he later said the Mexico tariffs had been delayed a month.

The whole kerfuffle appears to have taken investors by surprise, as they had initially discredited Trump's earlier threats of introducing tariffs. Even markets in Asia and Europe were shaken as a result.

And Nvidia, which was already still reeling from a comeuppance by Chinese AI startup DeepSeek upending Silicon Valley last week, felt the hurt.

Meanwhile, Bloomberg reported last week that Trump administration officials are considering additional curbs on exports of Nvidia chips to China, which would extend Nvidia's losses even further.

In other words, the whole situation is a mess of promises, takesies-backsies, and generalized chaos — a morass that serves as a reality check on Trump's early promises to support the AI industry.

Stargate Fate

Trump's tariffs are also expected to raise prices for AI data server equipment, which could weaken demand. The US heavily relies on importing data processing equipment from China, as Yahoo Finance reports. Nvidia's latest Blackwell AI chips will also soon be manufactured in a facility that's currently being constructed in Mexico.

In short, Trump's actions have already proven a massive self-own, giving a black eye to a key ally while laying groundwork for China to soar ahead in the ongoing AI race. DeepSeek's success, despite Biden administration-era export bans on AI chips, has already shown that international competitors can easily circumnavigate US protectionist measures, hitting markets where it hurts.

In the wake of Trump's tariffs, experts are warning that consumer prices, particularly in the US, could rise substantially.

Even Trump's own flashy $500 billion Stargate AI infrastructure deal could be threatened. Signees of the project are looking to build out enormous multibillion-dollar data centers, and import duties on crucial equipment could hinder their progress.

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