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Empower Representative (0:00)
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Jim Cramer (1:00)
My mission is simple. To make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. Other people make friends. I'm just trying to save you a little money. My job is not just to educate, but I got to teach you about today's like today and give you some context. Call me. 1873 CNBC We Mitch McGregor. Look, I was working on my talk for the CNBC investing club last night and it hit me like a bright bulb snapped on in a dark room. The real reason it is so hard for us to game all these tariffs is that the company's now being punished. We're doing exactly what companies were supposed to do. Burrow deep into the host country and become indispensable to them. And for that their businesses are being ravaged by the President United States who has an agenda that has nothing to do with theirs and is often at very cross purposes to you, the shareholder. That's why The Dow plunged 700 points today. S&P plummeted 2.24%. Nasdaq nosedive 3.07%. Hundreds of billions of dollars were lost today on the same order of tariffs and the great Chinese tariff embargo. Let's think about the travails of one of my all time favorite companies. Think about in video. Here's a business that makes the best technology product the world has ever seen. Run by one of the greatest visionaries of all time. Not just our time, Jensen Wa. Nvidia's advanced chips are the key to everything from Magentix and thinking bots to humanoid robots. Self driving cars. Its ships practically sell themselves and are at the heart of the new industrial revolution. Now this is a company that makes our nation proud. No country wants to be left behind. The Industrial revolution definitely one based on AI, right? And no country like China wants to be left behind. For Nvidia, China's the best kind of customer they could possibly have. I'm sure that China would happily buy huge numbers of chips and they'd probably buy all the chips. But what Nvidia didn't know was that it was selling its chips to an enemy nation. I don't blame them for not knowing, because nobody knew. At least nobody was operating under the rules of either President Biden or the previous president, President Trump. China was very open for business under those two. Sure, in his first term, President Trump was no friend to the People's Republic of China, but he wasn't a rapid hater either. Then again, China did grow more oppositional. Although it's not like it was ever a secret that the PRC was an authoritarian dictatorship with global ambitions sometimes antithetical to that of our own. Both parties now want to contain China. The Biden administration decided to limit some to some dumbed down Nvidia chips. Literally ones that were nowhere near as good as the cutting edge stuff that you could sell here. It was a shocking move. But even Nvidia's lesser chips were fast enough to China lap them up. They even found a way to stream together produce more efficient models like Deep Sea. So those sanctions did backfire. At that point, two imperatives burst forward in the new administration. One, the Trump team realized that Nvidia's dumbed down H20 chips were way too powerful for a country is now our serious rival in pretty much everything. If you're putting an economic and effective economic embargo on China, you shouldn't be sending them potato chips, let alone microchips. Second, the Trump team decided that companies like Nvidia and Apple should move their manufacturing back home and do so pronto. Trump time. But everybody knows that America is a very expensive place to manufacture things. If you want to successfully mass produce great products at affordable prices, you need to move your manufacturing overseas. The countries with lower wages or countries with where the government more or less subsidizing manufacturing like China. We practice free market capitalism in this country and the free Market wants you to outsource. If you're a rich developed country and you try to make this up domestically, you end up being like Research in Motion, aka BlackBerry. The Canadian also ran smartphone player, but those are the rules now. So Nvidia commits to producing up to $500 billion AI infrastructure here in the U.S. they already started making Blackwell chips in Arizona. They're going to make supercomputers in Texas. Yes. Now here's where things get interesting. The President is known for being the most serious practitioner of the art of the deal. Correct? You agree with me, right? When we saw that Nvidia was going to make $500 billion with its computers and so much other stuff here, Wall street mistakenly believed that there had to be some sort of of quid pro quo. Nvidia would spend big here to increase its domestic manufacturing footprint and Trump would leave Nvidia loan elsewhere. Nvidia never said there was a quid pro quo though. But how do you do a half a trillion dollars worth of business and not think that you get something out of it? And the answer is you did get something out of it. You get to build in the highest cost country in the world. The one that has few engineers and tough environmental regulations. Doesn't sound like a great deal to me, but it was the only one that seemed to be offered. The same thing happened to Apple. Like so many companies, they realize that they want to dominate the world. They need to dominate China. So Apple takes advantage of situation, builds the vast majority of phones over there. Americans get cheap. Iph we all love, everybody wins. But when tensions rise with China, Apple picks Vietnam to diversify from China. A friendly country, but one that's known also as the transshipper of Chinese goods. At first it seems fine. Then Trump too comes in and their escape valve even gets hit with a huge tariff. So they got huge business in China. Vietnam. No. It's almost like you can run, but you can't hide. Apple's done so much create new jobs in this country, but there are not many manufacturing jobs. Although they have partnered with other companies to do a lot of manufacturing here. Instead, Apple creates service jobs, especially in software. Billions of them. That's a pillar of our economy. But for whatever reason, nobody in Washington seems to care that much about protecting the all important service sector. Bizarrely, with this administration, service jobs don't seem to count. So when Trump comes back in and starts taking tariff, talking tariffs, Apple knows it's in jail. They commit to doing more than $500 billion worth of investments in this country over the next four years. Could there be a quid pro quo? Does Apple get anything for that 500 billion? Yes. It gets a real expensive country to do business in with not enough engineers to go around because our country doesn't produce a lot of them. Last night, not long after we thought that Nvidia could still sell China those age 20 chips, we found out that was over 2 and it had to take a $5.5 billion charge. For all intents and purposes, Nvidia may be done with China. If that's the case, Wall street acted as if they were done with Nvidia and its stock got crashed down almost 7%. Apple's got some sort of stave execution to move out of China. I no longer trust or believe there will be an electronics exception that will give the company anything near near a permanent break. The clock is ticking. I don't know if the Trump administration believes in the greatness of Apple any more than they believe in the greatest of video. It seems to mean nothing to them versus creating a successful Chinese embargo. That's their imperative. It's fine. He's the president U.S. not only that, I keep getting affiliate. The White House doesn't think either company is a good actor no matter what they do. Somehow our leaders seem to think that Jensen Wong and Tim Cook do do in this country. What they do just isn't important. It's the building of the inside of the phone that matters to them. It's like how they don't like the assembly of cars here. They want the engines built here too. Intellectual property is no more important than any other property. Like boardwalks equal to Mediterranean park places border. If you think this is bad policy, I got some news for you, partner. It doesn't matter what you think or what I think. It only matters what they think. Now it's starting to dawn on people that there's no immunity from the President's wrath on the issue. Just like there's no immunity for any law firm that's ever gotten on his bad side or any university for that matter. It's too woke. We don't trade law firms or colleges here. It just doesn't work. I mean, I've tried, but we do trade stocks and we're recognizing a theme here. When a company decides to do business with China, no amount of tribute to the American economy can make up for it, at least in the eyes of the White House. And don't think that going to Vietnam matters. This isn't 2018, this is 2025. Vietnam's apparently not good enough. It's here or nowhere for these guys. So what happens? The NASDAQ inevitably gets crushed with the Nvidia leading the decline because it's been a good supplier to the Chinese. You will hear from others today that it was all about Jay Powell, the Fed chief. They couldn't be more wrong. I mean honestly, just because the guys on TV don't make them right. The battle to contain China has everyone on edge. A quarter of a point here is meaningless versus this stuff, the real stuff, this stuff that's powering, power driving, pile driving, everything here, it's not in Chicago with the Fed chief. As much as I like that guy, the bottom line in this new world, any company that outsourced their manufacturing is a target. And short of moving everything back to America, which is impossible, there may be not be anything they can do to make it up for. Including. Including spending a half a trillion dollars to try to change the brand new equation, the embargo on China. Robert in Alabama. Robert.