US stock markets suffered more significant losses on Wednesday, with stocks in leading AI chipmakers slumping after firms said new restrictions on exports to China would cost them billions.

Nvidia fell 6.87% – and was at one point down 10% – after revealing it would now need a US government licence to sell its H20 chip.

Rival chipmaker AMD slumped 7.35% after it predicted a $800m (£604m) charge due to its MI308 also needing a licence.

Dutch firm ASML, which makes hardware essential to chip manufacturing, fell more than 5% after it missed order expectations and said US tariffs created uncertainty.

The losses filtered into the tech-dominated Nasdaq index, which recovered slightly to end 3% down, while the larger S&P 500 fell 2.2%.

Such losses would have been among the worst in years were it not for the turmoil over recent weeks.

It comes as China remains the focus of Donald Trump’s tariff regime, with both countries imposing tit-for-tat charges of over 100% on imports.

The US commerce department said in a statement it was “committed to acting on the president’s directive to safeguard our national and economic security”.

Nvidia’s bespoke China chip is already deliberately less powerful than products sold elsewhere after intervention from the previous Biden administration.

However, the Trump government is worried the H20 and others could still be used to build a supercomputer in China, threatening national security and US dominance in AI.

Nvidia said the move would cost it around $5.5bn (£4.1bn) and the licensing requirement would be in place for the “indefinite future”.

Nvidia’s recently announced a $500bn (£378bn) investment to build infrastructure in America – something Mr Trump heralded as a victory in his mission to boost US manufacturing.

However, it appears to have been too little to stave off the new restrictions.

Pressure has also come from the Democrats, with senator Elizabeth Warren writing to the commerce secretary and urging him to limit chip sales to China.

Meanwhile, the head of US central bank also warned on Wednesday that US tariffs could slow the economy and raise inflation more than expected.

Jerome Powell said the bank would need more time to decide on lowering interest rates.

“The level of the tariff increases announced so far is significantly larger than anticipated,” he said.

“The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”

Predictions of a recession in the US have risen significantly since the president revealed details of the import taxes a few weeks ago.

However, he subsequently paused the higher rates for 90 days to allow for negotiations.

Inflation fell more than expected and for the second month in a row, official figures show.

The consumer price index (CPI) measure of inflation fell to 2.6% in March, down from 2.8% in February and 3% in January, according to Office for National Statistics (ONS) data.

It means prices are rising at the slowest pace since December and closest to the Bank of England’s 2% target.

The rate is also lower than expected by economists polled by Reuters, who anticipated inflation of 2.7%.

But the drop is likely to be short-lived as a raft of bill rises kicked in at the start of April.

Energy, water, and council tax bills rose throughout the UK at the start of this month.

Why did inflation fall?

It was a fall in fuel costs, thanks to lower oil prices that led to the surprise drop, combined with the unchanged food price rise.

The price of games, toys and hobbies, as well as data processing equipment, all fell.

These drops counteracted a “strong” rise in the price of clothes, the ONS said.

The late timing of Easter also meant comparing March 2024 – as the ONS does with its annual inflation rise figure – with March 2025 isn’t comparing like with like.

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Easter and the associated school break bring things like higher airfares and hotel costs, something that was not seen last month as the feast takes place in April this year.

What does this mean for interest rates?

All measures of inflation fell, in a boost to the Bank of England as they mull interest rate cuts.

A key way of assessing price rises, core inflation, which excludes volatile price items like fuel and food, dropped to 3.4%.

It’s closely watched by the rate setters at the Bank of England, who meet next month and are widely expected to make borrowing less expensive by bringing interest rates down to 4.25%.

Another important measure – services inflation – dropped to 4.7% from 5% in February. As a predominantly services-based economy, a drop in that rate is good news for central bankers and households.

Inflation data, combined with the fact job vacancies are at pre-pandemic levels for the first time since 2021, has meant traders are now expecting four interest rate cuts this year, which would bring the base interest rate to 3.5% by December.

Business Secretary Jonathan Reynolds has said it is “likely” that British Steel will be nationalised.

However he also stressed the importance of finding a private sector partner for the business because the scale of capital required for steel transformation was “very significant, even with government support”.

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It comes after he appeared to row back on his claim that he would not bring a Chinese company into the steel sector again after ministers had to urgently step in to save the British Steel plant in Scunthorpe.

Mr Reynolds, speaking to reporters in the Lincolnshire town after raw materials arrived to keep the site running, said that nationalisation was the “likely option at this stage”.

He added: “What we are now going to do, having secured both control of the site and the supply of raw materials, so the blast furnaces won’t close in a matter of days, is work on the future.

“We’ve got the ownership question, which is pressing.

“I was clear when I gave the speech in parliament – we know there is a limited lifespan of the blast furnaces, and we know that what we need for the future is a private sector partner to come in and work with us on that transformation and co-fund that transformation.”

The government passed emergency legislation on Saturday to take over British Steel’s Scunthorpe plant, the last in the UK capable of producing virgin steel, after talks with its Chinese owners, Jingye, broke down.

The company recently cancelled orders for supplies of the raw materials needed to keep the blast furnaces running, sparking a race against time to keep it operational.

While those materials have been secured, questions remain about the long-term future of British Steel and whether it will be fully nationalised or the private sector will get involved.

Reynolds rows back

Mr Reynolds earlier said he would look at Chinese firms “in a different way” following the row but did not rule out their involvement completely.

He previously told Sky News’ Sunday Morning With Trevor Phillips, that he would not “personally bring a Chinese company into our steel sector” again, describing steel as a “sensitive area” in the UK.

However, industry minister Sarah Jones took a different position on Tuesday morning, telling Sky News she is “not ruling out” the possibility of another Chinese partner.

She said having a pragmatic relationship with Beijing, the world’s second-biggest economy, is still important and stringent tests would apply “to a Chinese company as they would to any other company”.

Asked for clarity on his position during a visit to the port of Immingham, where materials from two ships were being unloaded and transported to the plant, Mr Reynolds said: “I think we’ve got to recognise that steel is a sensitive sector.

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“A lot of the issues in the global economy with steel come from production and dumping of steel products… so I think you would look at a Chinese firm in a different way.

“But I’m really keen to stress the action we’ve taken here was to step in because it was one specific company that I thought wasn’t acting in the UK’s national interest, and we had to take the action we did.”

The materials that arrived on Tuesday, including coking coal and iron, are enough to keep the furnaces running for weeks, the Department for Business and Trade said.

They are needed because if the furnaces cool down too much, the molten iron solidifies and blocks the furnaces, making it extremely difficult and expensive to restart them.

‘Chinese ownership truly dreadful’

Opposition politicians have accused China of sabotage to increase reliance on its steel products, and want the country to be prevented from future dealings not only with steel but any UK national infrastructure.

Veteran Tory MP Sir Iain Duncan Smith said the government needs to define which industries are “strategic” – and prevent China from being allowed to invest in such sectors.

Liberal Democrats foreign affairs spokesperson Calum Miller said reverting to Chinese ownership would be like finding “your house ransacked and then leaving your doors unlocked”.

Reform UK leader Nigel Farage took the same position, saying the thought the government “could even contemplate another Chinese owner of British steel is truly dreadful”, and that he would not have China “in our nuclear program, anywhere near our telecoms or anything else”.

“They are not our friends,” he added.

Number 10 said on Monday that it was not aware of any “sabotage” at the plant and there is no block on Chinese companies.

The Chinese embassy has urged the British government not to “politicise” the situation by “linking it to security issues”, saying it is “an objective fact that British steel companies have generally encountered difficulties in recent years”.

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Jingye reported losses of around £700k a day at Scunthorpe, which will now come at a cost to the taxpayer.

During Tuesday morning’s interview round, Ms Jones said the government had offered Jingye money in return for investment and “we think that there is a model there that we could replicate with another private sector company”.

But she said there “isn’t another private sector company there waiting in the wings” currently, and that it may be a “national solution” that is needed.

She said “all of the options” were expensive but that it would have cost more to the taxpayer to allow the site to shut.

A YouGov poll shows the majority of the public (61%) support the government’s decision to nationalise British Steel.