Trump Has Triggered Global Economic Chaos

The United States has just banned Nvidia from exporting its H20 chips to China, causing a shockwave in the markets. This decision results in a colossal loss of 5.5 billion dollars for the American tech giant. Under Trump, we are witnessing the shift from a trade war to a total economic war between the United States and China.

Nvidia collapses following Trump’s decisions

On Tuesday, April 15th, Nvidia announced an exceptional charge of 5.5 billion dollars related to the ban on exporting its H20 chips to China . This decision by the U.S. government represents much more than a simple financial loss for the company. It symbolizes a radical toughening of the American stance towards Beijing.

Following this announcement, Nvidia’s stock dropped 6%, dragging down the entire Nasdaq, which lost 2% even before the markets opened. This reaction illustrates the strategic importance of this company, regarded as the technological flagship of 2024 with exceptional stock performance so far.

This restriction is not trivial. Previously, Nvidia could export less powerful chips to China, while the most advanced ones were reserved for the American market and its allies. Now, the U.S. government imposes a mandatory license without delay for any chip export to China, including those specifically designed to circumvent previous restrictions.

Trump declares a technological war

What started as tariffs under the Trump administration now evolves into a strategic technological confrontation. The United States no longer just taxes Chinese products but aims to block China’s access to the battle for dominance in AI, considered the next industrial revolution.

The emergence of DeepSeek this year made a big impression. This Chinese startup, with limited resources, made considerable advances in artificial intelligence, shaking American confidence. This event, followed by an initial collapse of Nvidia, can be seen as the trigger for the start of this stock market crisis.

The American administration, advised by Elon Musk, justifies its strategy by the need to preserve its technological superiority against a competitor seen as a threat. By this ban, Washington tries to maintain a decisive lead in AI by depriving its rival of the essential components for its technological development.

Towards a multipolar world

We are witnessing the emergence of a deep decoupling between two superpowers going well beyond the Nvidia case. This phenomenon is already observable with Huawei, whose products are banned in the USA for national security reasons.

This decoupling implies duplication of production chains, standards, and infrastructures. Ultimately, countries might be forced to choose their side according to the principle “either you are with us, or you are against us”. A philosophy reminiscent of the rhetoric of the post-9/11 Bush era.

The consequences for the global economy are significant. Consumers could face higher prices due to this duplication of production systems. Innovation might also slow down, and companies’ margins could decrease. Some analysts do not hesitate to speak of the end of globalization as we have known it, in favor of a world organized into two closed geopolitical blocs.

Trump has disrupted the markets

This new geopolitical reality leads to a profound questioning of stock valuations. Traditionally, tech companies like Nvidia are valued based on their anticipated future profits. The closing off of the Chinese market now forces a downward revision of expected earnings for many companies.

The impact goes far beyond the tech sector. LVMH also suffers a sharp decline, a sign that markets anticipate a global economic slowdown linked to this fragmentation. Despite the recent lows, the downward trend could persist as long as the market has not fully incorporated this new reality.

Unlike the 2008 crisis, centered on the financial sector, we face a systemic crisis that calls into question the very foundations of the global economy. The unprecedented shock to the markets could last much longer than a simple technical crash, with temporary rebounds in a generally negative trend.

Towards the end of the dollar?

Beyond the stock markets, this Sino-American confrontation could have repercussions on the supremacy of the dollar as the world’s reserve currency. Traditionally, in times of uncertainty, investors turned to U.S. bonds, considered the ultimate safe asset.

For the first time, this dynamic seems to be questioned. U.S. public debt no longer attracts investors as strongly, who worry about its long-term sustainability. Meanwhile, China is actively developing its digital yuan with the goal of competing with the dollar’s dominance.

If U.S. interest rates were to rise sharply due to a loss of confidence in American debt, the burden of this debt would explode, potentially leading to a crisis far more severe than the one we currently know. The issue thus goes far beyond a simple trade conflict.

In this context of global economic upheaval triggered by Trump, the Nvidia case appears as a warning signal announcing deeper transformations. Caution remains advisable for investors, even if opportunities may arise in this new fragmented geopolitical landscape. Because beyond the markets, it is the position of the dollar that is challenged.