There’s virtually nowhere to hide for many US technology companies under Donald Trump’s new tariff regime, the harshest in a century.
After Thursday’s slump wiped US$1.4-trillion in market capitalisation from the Nasdaq 100 Stock Index, the gauge is down 16% in the past six weeks. The Magnificent Seven even more, at 20%. Chip makers are in free fall. And there’s little sign the pain will end anytime soon.
China and Taiwan, the global hubs for chip and high-tech manufacturing, got hit with levies of 54% and 32%, respectively. Nascent production bases like Vietnam and India are staring at taxes of at least 26%.
That’s a disastrous setup for companies like Apple, Nvidia and Broadcom, US technology stalwarts that source hardware components and assembly labour from Southeast Asia — and use it to make their intellectual property worth trillions. For years, they’ve woven intricate supply chains that have delivered billions in profits and soaring share prices. It’s a system that can’t be unwound quickly, which means these companies are faced with a difficult choice: hike prices at a time when consumers are stretched thin or absorb costs and watch profits dwindle.
“This is really a worst-case scenario for tech, and I don’t think we’ve seen the end of the selling, since they will continue to suffer until we get more clarity or a change in policy,” said Paul Stanley, chief investment officer at Granite Bay Wealth Management.
Investors reacted swiftly, sending Apple shares tumbling 9.3% on Thursday after Trump announced his plan. The drop was the biggest for the iPhone maker since March 2020, erasing more than $310-billion from the company’s market value.
Latest headache
An index of chip related companies dropped nearly 10% with Micron Technology and Microchip Technology each falling more than 16%. Broadcom sank 11% and Nvidia 7.8%. Amazon.com, whose e-commerce business sells many products sourced from overseas, fell 9%.
Software makers, which have more limited exposure to tariffs, fared much better. Microsoft and Workday, for example, outperformed the S&P 500 with declines of 3% or less.
Read: Trump tariffs slam Africa
Tariffs are the latest headache for a tech trade that was minting money just a few months ago. From the end of 2022 to a February peak, the Nasdaq 100 more than doubled, trouncing the broader S&P 500. Since closing at a record on 19 February, however, the tech-heavy benchmark has fallen 16% and underperformed the S&P 500 by more than four percentage points. Traders have been taking profits and rotating into more defensive sectors amid fears of a recession and concerns about a potential pullback in spending on artificial intelligence infrastructure.
Wall Street analysts have been befuddled by Trump’s vision of bringing manufacturing operations back to the US, something that would be extremely costly and take years if not decades to accomplish.
Apple, for example, might need three years and $30-billion to move just 10% of its supply chain from Asia to the US, according to estimates from Wedbush analyst Dan Ives. He said such a move would cause “major disruption” and be a “non-starter” considering that the price of iPhones produced in the US would increase dramatically.
Not everyone is bearish. Jason Britton, chief investment officer at Reflection Asset Management, was a buyer on Thursday even though he’s bracing for more volatility ahead.
“There are significant pockets of opportunity being created,” Britton said. “I’m deploying cash in the names I liked yesterday. If your investment horizon is longer than 12 months, for companies that were strong businesses yesterday, you should be buying them today.” — Jeran Wittenstein and Ryan Vlastelica, with Subrat Patnaik, (c) 2025 Bloomberg LP
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