Trump’s trade blitz wipes out $5 trillion: Is Nasdaq tech heading into a deeper crisis?

Why Did Trump’s Tariffs Crash Nasdaq Tech Stocks This Week?

Donald Trump’s surprise decision to impose sweeping new tariffs on almost all imported goods has sent Nasdaq tech stocks into a downward spiral, wiping out more than $5 trillion in equity value over two trading days. The April 2 announcement, which the administration described as a “decisive economic reset,” immediately reignited fears of an extended trade war between the United States and China, placing technology companies directly in the firing line.

Within hours of the announcement, the Nasdaq Composite Index plunged by 11.2%, firmly entering bear market territory. According to Bloomberg data, this marks the fastest two-day bear market entry for the tech-heavy index since the 2008 financial crisis, surpassing the speed of the pandemic-driven crash of 2020. Wall Street’s Volatility Index (VIX) surged above 45, levels unseen since March 2020, highlighting the depth of market anxiety.

The technology sector’s sharp decline reflects a broader vulnerability that has built up over years of deepening globalisation. Nasdaq’s biggest names—including Nvidia Corporation, Apple Inc., Microsoft Corporation, and Amazon.com Inc.—are deeply intertwined with international supply chains and foreign revenue streams, leaving them highly exposed to the fallout from tariffs.

Why Did Nvidia, AMD, and Semiconductor Stocks Fall So Sharply?

Semiconductor companies have been at the epicentre of the selloff. Nvidia warned on April 3 that new export controls targeting high-end AI chips sold to China could wipe out $5.5 billion in expected revenue over the next four quarters. The announcement sent Nvidia’s shares down 6.3% in a single session, erasing more than $160 billion in market capitalisation. Advanced Micro Devices Inc. and Broadcom Inc. followed closely, posting declines of 7.8% and 5.6% respectively.

According to Goldman Sachs’ sector analysis, semiconductor stocks have historically been among the most sensitive to tariff-related shocks, given their reliance on China for both demand and manufacturing efficiency. In 2024, Nvidia derived nearly 21% of its revenues from China, while AMD and Broadcom reported similar double-digit exposures.

Expert commentary suggests that supply chain disruptions and higher component costs could reduce gross margins by as much as 300–400 basis points for major chipmakers if tariffs remain in place beyond Q2 2025. Morgan Stanley estimates that the Philadelphia Semiconductor Index (SOX) could face further downside risk of 8–12% over the next quarter without resolution.

How Are Apple, Microsoft, and Amazon Impacted by Trump’s Trade Policy?

Consumer technology giants are also grappling with immediate and potentially severe ramifications. Apple Inc., which remains heavily reliant on Chinese manufacturing partners like Foxconn and Pegatron, faces significant risks if tariffs are fully applied to finished electronics. Analysts at Wedbush Securities estimate that tariffs could shave up to 5% off Apple’s fiscal 2025 earnings per share (EPS), depending on the scope and duration of new levies.

Microsoft Corporation faces challenges both through hardware supply chains (Surface tablets, Xbox consoles) and enterprise contracts for cloud services reliant on global data center expansion. Although some of Microsoft’s cloud infrastructure is sourced from regions outside China, key components remain vulnerable to rising costs.

Amazon.com Inc., while relatively more insulated due to its diversified global footprint, still risks reduced margins in its device segment (Echo, Fire, Ring) and elevated operational costs linked to tariff-exposed logistics and supply contracts. Analysts at UBS predict that Amazon’s North American operating margin could contract by 50 basis points in H2 2025 if tariffs persist without exemptions.

Investor flows mirror these concerns. According to EPFR Global data, tech-focused equity funds recorded $8.2 billion in net outflows in the week following Trump’s announcement, the sharpest one-week retreat since early 2020.

What Is the Historical Context Behind Trump’s Tech Tariff Strategy?

Trump’s latest tariffs are not occurring in a vacuum. They are part of a longer pattern of trade protectionism that first escalated during his 2018–2019 administration. Back then, the imposition of 25% tariffs on $250 billion of Chinese imports triggered widespread supply chain reconfiguration, particularly among tech firms.

Despite an eventual “Phase One” trade deal in 2020 under former President Joe Biden, many of the structural trade imbalances remained unresolved. In his second term, President Trump has leaned heavily into nationalist economic policy, aiming to revive domestic manufacturing and reduce America’s dependence on Chinese imports.

Economists warn, however, that the nature of modern tech supply chains—especially in semiconductors, cloud hardware, and consumer devices—makes rapid reshoring nearly impossible. As a result, firms are likely to absorb higher costs, suffer delayed product launches, or pass costs onto consumers.

How Are Analysts and Investors Responding to Nasdaq Tech Volatility?

Sentiment across institutional investors has turned notably defensive. Analysts at JP Morgan lowered their overweight rating on U.S. tech equities to neutral, citing tariff risks, supply chain disruptions, and margin compression as material headwinds. Conversely, they maintained a bullish stance on domestic software-as-a-service (SaaS) providers and cybersecurity firms, which have lower hardware dependencies.

Retail investor sentiment has mirrored institutional caution. Robinhood data shows that individual traders sold a net $1.1 billion worth of tech equities in the past week, while increasing allocations to commodities and defensive sectors like healthcare and utilities.

Options markets also reflect growing pessimism. Open interest in Nasdaq Composite put options has soared by 38% since April 2, indicating a substantial rise in bets against further declines in tech stocks.

What Could the Future Hold for Nasdaq Tech Stocks Amid the Trade War?

The path forward for Nasdaq tech stocks hinges largely on political rather than purely economic variables. Should the Trump administration choose to expand tariffs further—to encompass additional electronic components, software licenses, or critical raw materials—the Nasdaq may face a drawn-out correction into the second half of 2025.

Alternatively, a potential trade détente or selective exemptions for technology categories (similar to what occurred during the 2019 negotiations) could pave the way for a partial recovery. Some industry insiders speculate that the Semiconductor Industry Association (SIA) is already lobbying Washington for exemptions related to AI and cloud-related exports.

Analysts at Citigroup remain cautiously optimistic, arguing that sectors tied to artificial intelligence, renewable energy technologies, and cybersecurity could recover faster once trade policy clarity emerges. Companies less exposed to Chinese revenue—such as ServiceNow, Snowflake, and CrowdStrike—are highlighted as potential outperformers in post-tariff portfolios.

Fundamentally, the Nasdaq’s innovation engine remains strong. Historic resilience during past disruptions—whether the dot-com bust, the financial crisis, or prior trade conflicts—suggests that while near-term pain may be unavoidable, long-term tech growth drivers remain firmly intact.

Nasdaq Faces a Tariff Storm, But Structural Strength May Prevail

Trump’s aggressive tariff escalation has triggered a violent selloff in Nasdaq tech stocks, reviving fears of a deeper economic decoupling between the United States and China. While semiconductor companies like Nvidia, AMD, and Broadcom are already feeling the brunt, consumer giants like Apple, Microsoft, and Amazon face looming cost pressures and earnings downgrades.

Yet as history shows, periods of geopolitical turbulence often catalyse supply chain innovation and strategic realignment. For patient investors willing to endure heightened volatility, today’s turmoil could ultimately offer attractive entry points into tomorrow’s technology leaders.