US Nvidia Chip Ban May Spark New Trade War and Crypto Sell-Off

Chipmaker Nvidia has a $5.5 billion loss hanging over it after the U.S. banned it from exporting AI chips to China. The decision not only ravaged tech stocks but also sparked fears of a broader U.S.-China trade war that could rattle both traditional and crypto markets.

In a filing on April 15, Nvidia said it expects to take a $5.5 billion charge in the first quarter of fiscal year 2026. This is because of unsold H20 processors, purchase agreements, and inventory meant for China. These advanced AI chips now require special export licenses after a sudden policy change by the U.S. government.

The U.S. told Nvidia on April 9 that these chips, and others with similar performance, can no longer be shipped to China, Hong Kong, or Macau without permission. The reason given is to stop the use of these processors in supercomputers that could be used for military or surveillance purposes. The H20 chip was one of the few models the company could legally sell to China under earlier rules, but even that is now restricted.

Stock Prices Take a Big Hit

After the news broke, Nvidia’s shares dropped over 6% in after-hours trading, falling to $105. Competitor AMD also experienced a drop of 7%, which came out to $88.55. Both companies have already seen big losses this year. Nvidia is down by 22%, and AMD is down more than 25% since January.

Could It Spark a New Trade War ?

The organisation's export bans appear to be in line with the increasing US-China trade war. It started with US tariffs on Chinese steel and aluminum, going as high as 145% by April 9. China retaliated with up to 125% tariffs. Now, the banning of chipmaker's AI chips fuels the flames, demonstrating that technology is the new front, threatening greater market volatility and more economic stress worldwide.

If China hits back by enforcing higher taxes or a ban on U.S. tech products, it will create more pressure on the market. It would result in a huge sell-off, probably severe than the previous crash. Experts warn that both nations are pushing each other further, and no organisation is safe from the consequences of it.

Impact on the Crypto Market

The crypto market may also be impacted. During the time of global market crashes , investors generally pull out of digital assets like Bitcoin and Ethereum, considering them risky. If the trade war begins, it might also lead to panic selling on the crypto exchanges.

Many crypto projects utilize AI tools to develop smart contracts, DeFi platforms, and trading bots. With Nvidia chips harder to access, development could slow down. Some startups that rely on these chips may even pause their projects.

What’s Next?

Nvidia recently said it plans to invest hundreds of millions of dollars in making AI chips inside the U.S. in the next four years. But it will not necessarily cure the short-term problems. As things develop, the crypto and tech communities are watching closely. If tension continues to escalate, the market can expect another storm — and this time, the crash could be even deeper.