The world’s most valuable chipmaker and the world’s largest contract manufacturer for electronics announced in November that Foxconn was building a massive factory in Guadalajara, Mexico, to assemble Nvidia’s artificial intelligence servers.

Starting in early 2025, Nvidia would start producing its hotly demanded GB200 NVL72 server racks in Mexico, the two companies said.

That announcement reflects what could be at risk if President Donald Trump’s blanket tariffs go into effect. Trump is expected to reveal more details on which specific tariffs will be placed on imports from China, Canada, and Mexico on Saturday. 

With Apple, Microsoft and Tesla reporting their December quarter earnings this week, investors will want to know how Trump’s threats of blanket tariffs on the country’s top trading partners could affect their businesses.

Those firms already grappled with proposed tariffs on consumer products from China in 2018, as well as China’s retaliation. But Trump’s proposed tariffs on electronics from Mexico would be a new wrinkle. 

That’s because many companies specifically expanded production in the country in a so-called nearshoring effort in response to Covid disruptions and the tariffs from the first Trump administration.

“If we increase the tariffs on Mexico, it’s actually penalizing the companies that have been very progressive and trying to make great strides and restructure their supply chain,” said Richard Barnett, chief marketing officer of Supplyframe, a Siemens subsidiary that makes software which tracks electronics component prices and lead times.

Electronic products imports from Mexico rose from $86 billion in 2019 to $103 billion in 2023, or about 18% of total electronics imports, according to the International Trade Commission. It’s the second-largest source for electronic products imports in the U.S. after China, which reported $146 billion in imports in 2023.

In addition to Foxconn, Chinese electronics manufacturers Lenovo and Hisense made splashy announcements in the past few years about building factories in Mexico. Flex, a Singapore-based contract manufacturer for gadgets and electronics, says it is the largest exporter in the Mexican state of Jalisco.

Trump may be looking to close a “loophole” where Chinese companies can avoid tariffs on their end by expanding in Mexico, said Simon Geale, executive vice president of Proxima, a supply chain consultancy that’s part of Bain & Co. 

“If you look at Chinese investment into Mexico, it has gone through the roof in the last three to five years,” Geale said. 

Even with Mexico’s growth, China is still the biggest source for electronics imports in the U.S. It accounts for 78% of production of smartphones, 87% of video game consoles and 79% of laptops, according to the trade group the Consumer Technology Association, or CTA. About a quarter of Chinese imports were electronic products.

While high-value and high-margin products like Nvidia’s GPUs are less sensitive to tariffs, many of the secondary parts needed to construct multibillion-dollar AI data centers — communications, storage and power management parts, for example — are vulnerable to price changes and import duties, Barnett said. Supplyframe’s price index shows a 6% year-over-year increase for electronic components in the fourth quarter of 2024, after Trump started threatening tariffs.

Nvidia CEO Jensen Huang was asked about the potential impact of tariffs in November, shortly after Trump’s election victory. 

“Whatever the new administration decides, we’ll, of course, support the administration, and that’s our highest mandate. And then after that, we do the best we can and just as we always do,” Huang said at the time, adding that the company would comply with regulations.

Foxconn did not respond to a request for comment, and Nvidia declined to comment.

Trade groups, academics and even the chief of the World Trade Organization warn that trade wars spurred by Trump’s tariffs could slow global commerce and raise prices for consumers. Analysts have said the Trump administration may be looking at the tariffs as a way to negotiate with other countries over issues such as drug trafficking and migration, although the president has denied this.

“The four big implications of tariffs that I foresee are higher prices, fewer rate cuts from the Fed, slower growth and fewer new jobs,” said Brett House, professor of professional practice at Columbia Business School.

It’s still unclear exactly how large the tariffs could be this time around. 

On the campaign trail, Trump talked about tariffs of up to 60% on China and 10% on all other imports. In his first week in office, Trump has backed off from the largest duties, discussing a 10% tariff across the board from Mexico and Canada and a 25% tariff on goods from China.

A 60% tariff on China would be a huge blow to American consumers, according to a report by the CTA.

Laptop and tablet prices might increase by 45%, video game consoles by as much as 40% and smartphones by as much as 26%. That’s a $213 increase in the average price of a smartphone, according to the CTA.

“It’ll affect the unit sales, meaning that each product will go up in price significantly,” CTA CEO Gary Shapiro said.

A key difference between these tariffs and the ones from 2018 is that Trump has threatened placing tariffs that could apply to all products, whereas the 2018 tariffs were targeted on specific product codes and categories, and companies could apply for waivers for their goods. 

Whether Trump follows through on placing tariffs across the board remains to be seen. The Washington Post reported earlier this month that the Trump administration is considering imposing fees only on certain sectors.

Experts at Columbus Consulting, a consulting firm focused on retailers, say their clients have already shifted budgets to account for increased costs. The firm is recommending that clients hold off on drastic measures – such as moving production into other countries or aggressively stockpiling extra inventory in advance – until they know what exactly will go into effect.

“We need to see the definition of what’s going to be tariffed and how much and when, and specifically which products,” said Jeff Gragg, managing partner at Columbus Consulting. “Until we get more specifics around it, overreacting can only put you in a dangerous position.”

Attempts to mitigate tariff expenses can end up being costly, whether that’s the increased price of freight or the opportunity cost of tying up capital in inventory, Gragg said. Some firms will have to pass the costs on to consumers, he said.

But the current uncertainty around import duties isn’t necessarily a sea change from the past few years. 

Some electronics still have tariffs on them from Trump’s first term. Semiconductors from China currently have a 50% tariff, for example. The Biden administration largely kept the import duty regime from the first Trump administration in place, giving firms a few years with less drastic changes, but many still had to grapple with import duties.

“Supply chains thrive on predictability, and the only thing that’s predictable about Trump is that he’s going to be unpredictable,” Geale said.

Cryptocurrencies tumbled to begin the final week of January, with the market in a cooling period after running to a new record and pulled lower by the DeepSeek-driven sell-off in tech stocks.

The price of bitcoin fell 3% to $100,776.81, according to Coin Metrics. Earlier, it fell as low as $97,750.00. The broader market of cryptocurrencies, as measured by the CoinDesk 20 index, dropped 7%.

The Nasdaq was down more than 3%.

Shares of Coinbase and MicroStrategy fell about 2% each in premarket trading. Bitcoin miners that power AI ventures suffered deeper cuts. Core Scientific slid 21%, while Terawulf lost 16%. Iren, formerly known as Iris Energy, fell 16%.

Crypto was under pressure from a rout in tech stocks. Chinese startup DeepSeek said it may have created a competitive artificial intelligence model for a fraction of the cost, sparking concerns about U.S. dominance in AI and big tech’s spending on AI models and data centers.

“Today’s 3% decline in Nasdaq futures (on DeepSeek news), so far, has driven Digital Asset liquidation overnight,” Standard Chartered’s Geoff Kendrick said in a note Monday. “This relationship highlights the continued strong (and strengthening) relationship between digital assets and the tech sector. [Bitcoin] remains strongly correlated to Nasdaq, much more so than it does to gold.”

Bitcoin has seen more than $250 million in long liquidations over the past 24 hours, according to CoinGecko, as traders who used leverage to bet the price of bitcoin would continue to rise were forced to sell their assets to cover their losses.

The selling follows a mixed response by the market to President Donald Trump’s widely anticipated executive order on crypto, issued Thursday afternoon, and a lack of news since. Some crypto traders were disappointed the order didn’t fully commit to the establishment of a stockpile, and some didn’t care for the “stockpile” language versus a reserve. (While the latter would involve actively buying bitcoin in regular installments, a stockpile would simply not sell any of the bitcoin currently held by the U.S. government.) Bitcoin hit a new record above $109,000 last week in anticipation of the executive order.

“Ultimately this set up digital assets to be more at risk of a sharp sell-off whether the driver of the sell-off came from digital assets or not (in this case Nasdaq),” Kendrick said of the market’s initial reaction to the order. “Nevertheless, at least the Trump administration news is out there, so the disappointment/confusion and therefore ‘hope phase’ is over.”

Investors may also be derisking ahead of this week’s Federal Reserve meeting, which is scheduled to conclude Wednesday.

“Investors are hoping the Fed will lean more to the accommodative side but are fearful the Fed won’t be as dovish as what the market would like to see,” said Joel Kruger, market strategist at LMAX. “The most important takeaway right now is to see the forest through the trees. When we look at the bitcoin chart, there is nothing bearish about the price action.”

—CNBC’s Michael Bloom contributed reporting.

Perplexity AI on Sunday revised the merger proposal it had submitted to TikTok parent ByteDance. The proposal, which would create a new entity combining Perplexity and TikTok U.S., would now also allow for the U.S. government to own up to 50% of the new company upon a future IPO, CNBC has learned.

A proposal document viewed by CNBC, which was shared with ByteDance and prospective new investors, detailed the creation of a new U.S. holding company, “NewCo.”

The document proposes ByteDance contribute TikTok U.S., minus its core recommendation algorithm, in exchange for the company’s existing investors receiving equity in the new company. Perplexity AI would offer itself up in exchange for its own investors receiving a distribution of the NewCo equity.

Money for the merger would come from “new third-party capital provider(s) (to be mutually agreed upon),” per the proposal document, which would provide capital for a “one-time dividend payment to ByteDance investors in exchange for simplified governance” and to help the new entity grow.

Perplexity AI, the artificial intelligence search engine startup competing with OpenAI and Google, started 2024 with a roughly $500 million valuation and ended the year with a valuation of about $9 billion, after attracting increasing investor interest amid the generative AI boom — as well as controversy over plagiarism accusations. Investors have viewed AI-assisted search as one of Google’s key risks, as it potentially changes the way consumers access information online.

Last year, OpenAI, which started the generative AI craze in late 2022 with ChatGPT, introduced a search engine called SearchGPT. Google later launched “AI Overviews” in search, allowing users to see a quick summary of answers at the top of results.

The proposed new structure would allow for most of ByteDance’s existing investors to retain their equity stakes and would bring more video to Perplexity, a source familiar with the situation told CNBC earlier this month. And although ByteDance has publicly implied it will not sell TikTok U.S., that’s part of why Perplexity AI believes it has a shot with its bid — since the deal would be a merger rather than a sale, the source added.

Under the revised proposal, the U.S. government could own up to half of the new structure once it IPOs at least $300 billion, according to the source.

A fair price is “well north of $50 billion” but the final number attached to the proposal will be decided, in part, by which of ByteDance’s existing shareholders want to remain part of the new entity and which want to cash out, according to the source.

Though any potential transaction between Perplexity AI and ByteDance would likely take months to complete, President Donald Trump has so far temporarily restored TikTok in the U.S. and suggested plans that would involve an American stakeholder purchasing the company and then selling a 50% stake to the U.S. government. In a video posted to TikTok earlier this month, CEO Shou Zi Chew said, “I want to thank President Trump for his commitment to work with us to find a solution that keeps TikTok available in the United States.”

Perplexity is one of multiple companies and individuals vying to be the one to purchase or merge with TikTok, which reportedly include Microsoft, Oracle and potentially Elon Musk. On Saturday, President Trump said he would likely have a decision on the app’s future in the U.S. in the next 30 days.