NVIDIA Corporation (NASDAQ: NVDA), Advanced Micro Devices, Inc. (NASDAQ: AMD), and Micron Technology, Inc. (NASDAQ: MU), among others, all had a rough start to the trading session this morning. While some of the stocks affected have made up some of the losses, we’re seeing red across the board in the market today and it all has to do with the trade war sparked by the Trump Administration’s tariffs on steel and aluminum. Today, we’ll talk about:
- Recent developments in the trade war that are turning the market red;
- Why stocks like NVDA, AMD, and MU are being affected most;
- and what to watch for ahead.
The Trade War Is Growing
As mentioned above, the trade war seems to be growing more intense with each passing day. It all started when United States President Donald Trump announced that he would impose tariffs of 10% for steel and 15% for aluminum that is imported into the United States. Of course, this didn’t bode well for various countries around the world. Countries like China and Canada have economies that are heavily dependent on these commodities, and imports to the United States are a key aspect of their growth.
So, it’s no surprise that we’ve seen some backlash from the global community. Nonetheless, in the forefront of the trade war, we have the United States and China, two of the world’s largest economies. In an attempt to put pressure on the United States after the steel and aluminum tariffs, China announced this week that it would be imposing its own tariffs on United States products. The tariffs would affect just about everything from whiskey to soybeans to cars and airplanes. Ultimately, the tariffs would be imposed on approximately $50 billion in US exports!
Of course, the Trump Administration isn’t one to back down, even to the potential detriment of the United States and global economies. So, the next move made was an announcement of more than 1,000 Chinese exports that would be the target of further tariffs from the Trump Administration. So, we’re all caught up… let’s get to how it’s affecting the market.
NVDA, AMD, MU, And Many Others Could Feel Some Serious Pain
As mentioned above, the news surrounding the trade war is not good for NVIDIA, Advanced Micro Devices, Micron Technology, and many others. The reality is that many companies that are based in the United States are heavily dependent on both Chinese imports and exports to China. Each of the companies mentioned may be based in the United States, but they all have products that are largely made using components that were made in China. On top of that, each one of these companies has a key target market in China.
Ultimately, the fear is that the trade war will force these companies to raise their prices due to growing costs on them as the result of tariffs. As the law of supply and demand dictates, when prices rise, demand tends to taper off. So, for many American companies, including NVDA, AMD, MU, and others, the trade war is very, very bad news!
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What To Watch For Ahead
Moving forward, it’s a good idea to keep a close eye on NVDA, AMD, MU, and others that could be affected by the trade war to see just how much the bottom line will change. Also, keep a close eye on the trade war. With Chinese authorities going head to head with the Trump Administration, neither party is likely to back down any time soon. So, this thing could really heat up!
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