Nvidia is caught in the middle of an escalating trade war between the world’s two largest economies. Nvidia on Tuesday said it will take a $5.5 billion financial hit after Washington placed fresh restrictions on the export of its H20 artificial intelligence chips to China,

Shares of Nvidia and its suppliers concentrated in Asia dropped after Trump imposed a new export license requirement that would lead to an estimated $5.5 billion charge on the chipmaker's Q1 balance sheet.

The government informed Nvidia on Monday that the H20 would require a license to export to China “for the indefinite future,” the company said in a regulatory filing Tuesday. The government said that the new rules address concerns that “the covered products may be used in, or diverted to, a supercomputer in China.”