ETF investors are facing a new combination of policy risk and reprieve this week as US–China tensions overflow into the semiconductor and precious metals markets.
Nvidia is stuck in the tariff crosshairs. Check its live prices here.
Beijing has apparently instructed local companies not to use the Nvidia Corp (NASDAQ:NVDA) H20 chips for government business. Although not exactly a ban, the action potentially will chip away at demand for Nvidia and Advanced Micro Devices Inc (NASDAQ:AMD) semiconductors in China, just days after those two companies agreed to pay the U.S. government 15% of revenue on some chip sales there. The revenue-sharing agreement, previously viewed as a Washington victory, now looks uncertain to pay off.
Focus ETFs:
VanEck Semiconductor ETF (NASDAQ:SMH): Its largest holding is Nvidia, which provides the fund with solid upside to the AI mania as well as vulnerability to China’s demand shocks.
iShares Semiconductor ETF (NASDAQ:SOXX): It follows a comparable basket to SMH, with significant weightings in Nvidia and AMD, making it equally exposed to chip trade headwinds.
Global X Artificial Intelligence & Technology ETF (NASDAQ:AIQ): Wider AI exposure, but hardware-led gains may falter if leading chipmakers are hit by a sales downturn.
SPDR Gold Shares (NYSE:GLD) & iShares Gold Trust (NYSE:IAU): Due for relief after the White House made it clear gold imports will not be subject to tariffs, cutting a potential headwind.
The tariff environment provides a partial offset. On Monday, President Donald Trump renewed the tariff ceasefire with China for 90 days, thrusting negotiations into the fall. China reciprocated with a move that provided semiconductor ETFs with some temporary breathing room for global supply chains.
Conversely, gold ETFs could gain more forcefully from policy clarity. Uncertainty last week regarding the potential tariff on some gold bars had shaken bullion markets. Trump’s announcement that “gold will not be tariffed” dispels that uncertainty, although industry groups continue to demand a formal, binding exemption.
For the time being, trade-focused ETFs are caught between two opposing forces: a short-term easing of tariffs that is favorable to trade flows, and strategic actions, such as China’s guidance on Nvidia, that can reset demand in the longer term. Investors in both semiconductors and gold will need to be cautious about how quickly sentiment can shift when geopolitics and markets intersect.
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