Nvidia's stocks dropped by around 4% in premarket trading on Monday after President Donald Trump mentioned that no countries would receive preferential treatment regarding reciprocal tariffs. Trump's announcement on Air Force One indicated that all countries would be targeted with reciprocal tariffs set to be revealed on April 2, referred to as "Liberation Day." This statement contradicted investor expectations of a less aggressive trade policy by Trump, leading to concerns about a potential economic recession.

The market response to Trump's remarks triggered a sell-off, with US tech stocks, including Tesla, experiencing significant losses. Nvidia was already poised to be impacted by Trump's tariffs, which include a 25% tariff on goods from Mexico and Canada. As Nvidia's GPUs are used in AI servers imported from Mexico, the increased prices of these servers might impact demand for Nvidia's AI chips.

Moreover, continued reciprocal tariffs could further affect Nvidia, especially if they target Taiwan, which is a major source of computer parts including printed circuit boards for Nvidia's GPUs. Taiwan is home to TSMC, a prominent AI chip contract manufacturer for Nvidia.

Trump also hinted at potential import taxes on internationally produced semiconductors in the future, adding uncertainty for Nvidia. Although Nvidia anticipates some impact from tariffs, CEO Jensen Huang mentioned that the company is considering domestic manufacturing in the US. Nvidia's stocks have faced a challenging year in 2025, declining by more than 18% year-to-date amidst concerns about lofty valuations in the AI sector and the looming trade conflicts. Analysts have highlighted that the full implications of Trump's tariffs had not been factored into the market before his recent comments.