CNBC Daily Open: Not even fire extinguishers can escape the Trump administration's tariffs

The Trump administration is broadening its protectionist trade policy, imposing a 50% import tariff on over 400 additional product categories, including machinery and construction materials. Concurrently, the U.S. tech sector faces significant developments: Nvidia is reportedly developing a new, more powerful AI chip for China, potentially indicating a nuanced approach to export controls, while the U.S. government is seeking an equity stake in Intel in exchange for CHIPS Act funding, setting a new precedent for federal investment in strategic industries. Market reactions were mixed, with the Nasdaq Composite falling 1.46% due to tech stock weakness, though the FTSE 100 achieved a record close and UBS raised its gold price targets.

Analysis

The Trump administration is escalating its protectionist trade policy by expanding 50% import tariffs to over 400 new product categories, including machinery and construction materials, signaling broader inflationary pressure and supply chain disruption for industrial sectors. In the semiconductor space, a dual-track policy approach appears to be emerging: Nvidia (NVDA) is reportedly developing a more powerful Blackwell-based AI chip for China, a move perceived positively by the market with a +0.7 sentiment score, suggesting a potential carve-out in export controls. Conversely, Intel (INTC) faces a novel arrangement where CHIPS Act funding will be exchanged for a U.S. government equity stake, a significant precedent in public-private partnership for strategic industries. This complex policy environment contributed to divergent market performance, with the tech-heavy Nasdaq Composite falling 1.46%, dragged down by significant losses in stocks like Palantir (PLTR) which sank over 9%, while European markets advanced and the UK's FTSE 100 hit a record close. Reinforcing a cautious macro outlook, UBS has increased its 2025 and 2026 price targets for gold, despite a recent lull in the commodity's rally.

Key Decisions for Investors

• Investors should closely monitor developments around Nvidia's reported new chip for China, as regulatory approval could unlock significant revenue, while weighing the potential share dilution against the strategic necessity of government funding for Intel.
• Companies in the machinery, construction, and manufacturing sectors are now exposed to new 50% tariffs, warranting a review of positions sensitive to import costs and supply chain vulnerabilities.
• The notable underperformance of the Nasdaq, driven by a sharp 9% drop in Palantir, compared to record highs in the UK, suggests a potential for regional rotation and highlights the utility of gold as a hedge, supported by UBS's bullish forecast.
• The sharp, unexplained drop in Palantir stock warrants immediate due diligence to determine if the decline is a market-wide tech sell-off or a result of company-specific negative catalysts.