Trump’s Tariff Pause Gave Nvidia a Lift—But Will It Last?

In early April 2024, Nvidia found itself benefiting from an unexpected source of optimism: US politics. The Biden administration announced a temporary pause on certain tariffs related to semiconductor equipment exports to China, offering short-term relief. However, this was reversed by the Trump administration in early 2025, which imposed stricter export controls on advanced chips.

Nvidia, a global leader in AI and semiconductor technologies, saw a notable surge in its stock price following the announcement. But while this brief rally may have been welcome, it raises a critical question: is this lift a temporary boost, or a harbinger of sustained stability for the chipmaker?

 

Why the Tariff Pause Matters for Nvidia

Nvidia is far from being just a chip designer. With a strong presence in AI, gaming, data centres, and automotive sectors, the company’s global footprint has made it particularly susceptible to the whims of international trade policies. A significant portion of Nvidia’s revenue derives from China, especially in the data centre and AI chip markets. Thus, any changes to US-China trade relations are keenly felt within the company’s financials.

The US government’s export restrictions on high-performance semiconductors have already impacted Nvidia’s ability to sell to Chinese clients. The Biden administration introduced major export restrictions in 2022 that limited Nvidia’s ability to sell advanced chips to China. These restrictions were further tightened under Trump in 2025, expanding the ban to cover even Nvidia’s previously compliant chips. When the US Trade Representative announced a temporary pause on tariffs for certain semiconductor equipment, it acted as a relief for Nvidia, even though the company was not explicitly named in the exemptions.

In practical terms, the tariff pause offers a brief respite. On April 9, 2024, Nvidia’s stock jumped over 4% intraday, according to CNBC, but this gain was later tempered by renewed export restrictions implemented in early 2025 under the Trump administration. The pause was seen as a potential game-changer for the semiconductor sector, particularly in easing supply chain bottlenecks and reducing the risk of compliance costs associated with restrictive export policies.

 

But We’re Not Talking Stability—We’re Talking Uncertainty

Despite the immediate stock market boost, a looming question remains as to whether this temporary relief will lead to lasting stability. The pause on tariffs doesn’t signal the end of the trade war between the US and China. Rather, it may be a politically motivated tactic as the US presidential elections approach. With global markets jittery over electoral uncertainties, the Biden administration might be strategically toning down its stance to avoid upsetting voters and allies in the lead-up to November 2024.

This uncertainty leaves Nvidia in a precarious position. While the pause offers some short-term advantages, the regulatory uncertainty around export controls remains a significant challenge. The prospect of further restrictions, particularly on high-performance GPUS used in AI, continues to loom over Nvidia’s prospects. As Bloomberg reported, the US government has been urging countries like Japan and the Netherlands to restrict their sales of advanced semiconductor tools to China, a move that could further complicate Nvidia’s position in the Chinese market.

 

China Still Matters—A Lot

Even as the tariff pause offers some temporary breathing room, it’s important to remember just how crucial China is to Nvidia’s revenue stream. Nvidia’s FY2024 report showed China represented around 19% of revenue, but due to expanded restrictions, this figure dropped to mid-single digits by early 2025. That number would likely have been higher if the US export controls had not been introduced in 2023.

Nvidia initially responded by releasing the A800 and H800 chips to comply with US rules, but these chips were later banned under stricter export controls introduced in October 2023. These products have since been banned by updated US export rules, and Nvidia is now focusing on newer models like the H20 and L20 for the Chinese market, though these too face licensing restrictions.

So, while the tariff pause gives Nvidia some temporary relief, it does not fundamentally change the underlying geopolitical rift that is disrupting the semiconductor industry’s global supply chain.

 

A Broader AI Boom Cushions the Impact

If Nvidia were solely reliant on the Chinese market, there would be cause for concern. However, Nvidia’s diversification into AI, cloud data centres, and automotive chips provides a cushion against some of the geopolitical risks. The ongoing boom in AI technologies, which has driven demand for Nvidia’s chips, continues to underpin the company’s long-term growth prospects.

In Q4 FY2024, Nvidia reported a record $22.1 billion in revenue. However, in 2025, the company disclosed a potential $5.5 billion revenue impact due to unsold inventory and cancelled Chinese orders, especially affecting its H20 chips. This demand is primarily coming from hyperscale cloud providers like Microsoft Azure, Amazon Web Services, and Google Cloud—companies that are largely insulated from the geopolitical tensions surrounding China.

This resilience in Nvidia’s business model suggests that, despite trade tensions, the company’s fundamentals remain strong. As we see it, Nvidia’s market performance hinges less on its relationship with China and more on the growing demand for AI technologies across various sectors.

 

Investor Sentiment: Still Bullish, But Wary

Investor sentiment towards Nvidia has remained optimistic, but with a cautious undertone. As of mid-April 2024, Nvidia’s stock has surged more than 70% year-to-date, placing it among the best-performing mega-cap stocks globally. Analysts from firms such as Morgan Stanley and Goldman Sachs continue to rate Nvidia as a ‘Buy’, citing the continued strength of AI demand as a key driver of future growth.

However, even the most optimistic analysts acknowledge the risks. The “China risk” continues to be a prominent theme in earnings calls and brokerage notes. As geopolitical tensions continue to simmer, Nvidia’s ability to operate freely across borders is far from guaranteed.

 

Could the Tariff Pause Backfire?

Interestingly, some policy analysts have raised concerns that the pause on tariffs could backfire. If Nvidia or other semiconductor companies take advantage of the tariff pause to increase exports to China, it could lead to more stringent restrictions down the line. This cycle has already played out in the past when companies like Huawei found ways to circumvent chip bans, and US regulators responded with even harsher measures.

It’s worth noting that if Chinese firms use Nvidia’s AI chips for military or surveillance purposes, as some US lawmakers have expressed concern about, Nvidia could face additional scrutiny, resulting in even tighter restrictions. This dynamic could invite even more regulatory pressure, undermining the temporary relief that the tariff pause provides.

 

Where Do We Go From Here?

Looking ahead, Nvidia’s short-term prospects remain relatively bright, buoyed by the ongoing AI boom and strong investor sentiment. But the medium- to long-term outlook remains clouded by geopolitical tensions. The ultimate direction of US-China relations, particularly after the 2024 election, will play a major role in shaping Nvidia’s future.

Additionally, Nvidia’s upcoming Blackwell GPU architecture, set to launch in late 2024, could serve as a game-changer. However, this depends on whether the product can avoid becoming a political pawn in the ongoing US-China tech war.

 

Final Takeaway

The recent tariff pause certainly gave Nvidia a lift, but it’s important to recognise that this isn’t a game-changer. Rather, it’s a reprieve. While Nvidia remains a dominant player in the semiconductor space, it’s also navigating a complex geopolitical environment that could undermine its progress.

For now, investors may want to maintain cautious optimism, watching closely for further developments in trade policy and regulations. Nvidia’s growth potential remains strong, but as the company is increasingly tethered to the whims of international politics, its future is not without risk.

 

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FAQs

• Why did Nvidia’s stock rise in April 2024?

  Nvidia’s stock rose after the US paused certain tariffs on chip equipment exports to China, easing trade tensions and boosting investor confidence in Nvidia’s data centre and AI chip business.

• Does the tariff pause mean Nvidia can freely export to China now?

  Not entirely. While some export restrictions have been relaxed, Nvidia still faces regulatory scrutiny, particularly regarding high-performance AI chips.

• How much of Nvidia’s revenue comes from China?

  As of FY2024, around 19% of Nvidia’s revenue came from China, despite ongoing export controls. This market remains important but volatile.

• Could the tariff pause backfire on Nvidia?

  Yes. If Nvidia accelerates exports to China during the tariff pause, it could prompt US regulators to impose even stricter controls, exacerbating the geopolitical risks it faces.

• Is Nvidia still a good stock to invest in despite geopolitical risks?

  Many analysts continue to rate Nvidia a ‘Buy’ due to strong demand for AI technologies. However, investors should remain cautious and consider the risks associated with ongoing geopolitical tensions.