Tech Stocks Decline Amid Trade War Uncertainty

On January 20, 2025, high-profile tech industry leaders, including Meta and Facebook CEO Mark Zuckerberg, Amazon founder Jeff Bezos, Google CEO Sundar Pichai, and Tesla CEO Elon Musk, gathered for the inauguration of President Donald Trump in Washington, DC.

Since President Trump's inauguration, technology stocks have experienced a significant downturn, dropping more than 7%. This decline can be attributed to the new tariffs implemented, which have led to an escalating trade war that is creating uncertainty in the financial markets.

Economists have expressed concerns that the ongoing tariff conflict could lead to increased inflation and global economic disruptions. As a result, many investors are choosing to sell off their winning stocks to reduce their risk exposure.

The technology sector, particularly sensitive to such changes, has suffered as a consequence. On a single trading day, the S&P 500 technology sector plummeted by 3.5%, marking a total loss of 7.6% since Trump took office.

Leading technology companies like Apple and Nvidia could see their manufacturing costs rise due to tariffs, especially as many of their products are assembled and manufactured abroad. For instance, Nvidia's stock fell nearly 9% on one recent Monday and has lost over 17% total since the inauguration.

While Nvidia prepares to shift some of its chip production to the United States, its main operations remain in Taiwan. This has sparked additional concerns among investors about the long-term profitability of tech companies reliant on global supply chains.

Declining Semiconductor Stocks

The semiconductor sector has also faced challenges, with the VanEck Semiconductor ETF down almost 14% since the inauguration. Other companies in this industry, such as Advanced Micro Devices, have seen stock declines of about 20%, while Broadcom and Marvell Technology stocks have dropped more than 21% and 31%, respectively.

Moreover, major tech companies have suffered losses as well. Tesla, backed by CEO Elon Musk, has seen its value drop by a third since the inauguration. Similarly, Alphabet (Google's parent company) has dropped around 15%, while Microsoft and Amazon have both seen reductions of at least 10%. In contrast, Apple has managed a slight uptick of 3%.

Escalating Tariffs and Global Reactions

President Trump dismissed potential last-minute negotiations that might lead to a resolution of the tariff situation. He announced the implementation of a 25% duty on goods from Canada and Mexico and added a 10% tariff on products from China.

Canada and Mexico have indicated that they will respond with their own retaliatory tariffs, with Canada implementing them as early as Tuesday, and Mexico preparing its response soon. In retaliation, China has announced up to a 15% tariff on certain U.S. goods.

The ongoing trade war and associated tariffs pose challenges not only to tech stocks but also to the broader market, causing concern among investors and companies alike about the potential for increased costs and uncertainty moving forward.

Tech, Stocks, Trade