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Trump increases tariffs for China, AMD and Nvidia could be in trouble

President Trump raised the Chinese tariffs from 10% to 25% without any warning. (Source: Washington Times)
President Trump raised the Chinese tariffs from 10% to 25% without any warning. (Source: Washington Times)
Tensions between the U.S. and China are higher than ever, as president Trump increased the Chinese tariffs from 10% to 25% without any warning. China is still willing to continue the negotiations, but AMD and Nvidia investors fear that negotiations could fail and the companies may eventually be locked out of the Chinese market.

The trade wards between the U.S. and China appeared to take turn for the better when U.S. president Donald Trump postponed the tariffs on Chinese imported merchandise earlier this year, citing productive talks with the Chinse counterpart. However, Trump went ahead and raised tariffs from 10% to 25% on US$200 billion worth of goods this Sunday, and the tensions between the two countries are suddenly higher than ever. The U.S. president is also considering applying the raised tariffs to another US$325 billion worth of goods, but China is willing to send representatives to the U.S. in order to negotiate a solution.

AMD and Nvidia investors are concerned that the negotiations could fail, and the trade wars would intensify. This was reflected in a 4% share price drop for both companies, and so far the general trend is negative. The increased tariffs may not pose too much problems in the long run, but an all-out war between the two countries could prove devastating for companies that outsource components from China. In a Business Insider report, RBC analyst Mitch Stevens notes that “a major concern here, the products would be deemed mission-critical, and the U.S. would prevent shipments to China, or tax them heavily (a large buyer of GPUs). We think China trade talks will negatively impact our universe. Most notably, we think GPUs and Semi-cap are most at risk to the downside if tensions continue to rise."

Tom’s Hardware also points out that the Chinese gaming market is evolving at an unprecedented rate, with latest reports from Niko Partners citing 354 million gamers by 2023. Cutting access to the Chinese market would greatly diminish AMD’s and Nvidia profits in the next 5 years. But not all is lost. Even if the U.S. and China do not manage to come up with a solution to the trade wars, AMD and Nvidia may still be able to sell their products in China through careful negotiations.

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> Notebook / Laptop Reviews and News > News > News Archive > Newsarchive 2019 05 > Trump increases tariffs for China, AMD and Nvidia could be in trouble
Bogdan Solca, 2019-05- 8 (Update: 2019-05- 8)
Bogdan Solca
Bogdan Solca - News Editor
I stepped into the wonderous IT&C world when I was around 7. I was instantly fascinated by computerized graphics, be them from games or 3D applications like 3D Max. I like to keep myself up to date with all the new technologies that get released at an ever increasing rate these days. I'm also an avid SciFi reader, an astrophysics aficionado and, as of late, a crypto geek.