Nvidia (NVDA) CEO Jensen Huang has issued a stark warning about the risks of escalating U.S.-China trade tensions, arguing that American restrictions on technology exports could ultimately accelerate China’s self-sufficiency and damage U.S. economic interests. Huang’s remarks come at a time of heightened economic uncertainty, with the U.S. and China locked in a deepening trade war marked by sweeping tariffs and retaliatory measures.

Nvidia’s Perspective: “Huawei Has China Covered”

Speaking at a recent industry event, Huang stated that if the U.S. chooses not to participate in China’s technology sector, Chinese companies like Huawei are well-positioned to fill the gap. 

“If the United States doesn’t participate in China, Huawei will have China covered,” Huang said, highlighting how export controls and restrictions could inadvertently strengthen China’s domestic tech ecosystem.

Huang’s comments reflect growing concern within the U.S. tech industry that broad export bans may not only hurt American companies’ revenues, but also spur Chinese rivals to innovate and replace U.S. technology more rapidly.

Tariffs and the Trade War: Economic Fallout Intensifies

The U.S. government has recently implemented a new wave of tariffs targeting China, raising duties on Chinese imports to over 145% at their peak before scaling back to 55% after the latest trade agreement. These measures, part of a broader strategy to pressure China on trade and technology, have triggered swift retaliation from Beijing and ignited a trade war, which seems to be finally settling down

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Key consequences for the U.S. economy include:

• Declining Growth: The World Bank and OECD have both slashed their forecasts for U.S. economic growth, with the World Bank projecting that growth will halve to 1.4% in 2025 due to tariffs. The OECD warns that the fallout from the trade war is taking a bigger toll on U.S. growth than previously expected.
• Rising Costs for Households: The average U.S. household will pay nearly $1,200 more in 2025 as a result of higher tariffs, according to the Tax Foundation.
• Reduced Real Wages and Employment: Real wages are projected to decline by 1.4% by 2028, with GDP falling by about 1% and labor force participation dropping as well.
• Sectoral Shifts: While manufacturing employment may rise modestly, jobs in services and agriculture are expected to decline, leading to overall lower employment and real income.

And, it’s already begun leaving a sizeable dent in Nvidia’s top and bottom line. While the idea is to secure America’s lead in the AI race, Huang says it could do just the opposite. China’s Huawei will likely be able to supply China with any tech it needs to maintain a strong second place in the AI race, meaning all it is doing is harming Nvidia. More money means Nvidia has more cash to conduct research and maintain its lead over competitors like Huawei. This means the trade war could have the opposite effect of its intended benefit. 

Global and Domestic Risks

The trade war’s impact extends beyond U.S. borders. Major trading partners — including Canada, Mexico, and the European Union — have imposed retaliatory tariffs affecting $330 billion of U.S. exports, further reducing U.S. GDP and global economic growth.

Domestically, the economic pain is not evenly distributed. Some U.S. states are projected to suffer real income losses exceeding 3%, especially those with strong trade ties to China and other targeted countries. This further exacerbates the above issue with Nvidia, potentially harming its reach in places like the EU, thus driving these companies to China or other competitors. 

The Strategic Gamble: Technology and National Security

The U.S. government’s rationale for restricting tech exports to China centers on national security and the desire to maintain technological leadership. However, as Huang and other industry leaders have pointed out, these policies may have unintended consequences. By forcing China to accelerate its own innovation, particularly in semiconductors and artificial intelligence, U.S. restrictions could ultimately erode America’s competitive advantage.

As China doubles down on its industrial policy and “new quality productive forces,” companies like Huawei are rapidly advancing, potentially reducing their reliance on U.S. technology.

High Stakes, Uncertain Outcomes

The escalating U.S.-China trade war, marked by tariffs and technology restrictions, is already weighing on the U.S. economy through slower growth, higher consumer costs, and shifting employment patterns. Nvidia CEO Jensen Huang’s warning underscores the risk that American policy could backfire—strengthening Chinese tech champions and leaving U.S. firms on the sidelines of the world’s largest market.

As the trade war continues, policymakers face a delicate balancing act: protecting national security without sacrificing economic prosperity, or ceding long-term technological leadership to rivals.