Tech stocks took a hit on Tuesday. The PowerShares QQQ Trust ETF (NASDAQ:QQQ) got whacked for a 1.4% loss on the day — its worst daily decline since the early February swoon. Microsoft Corporation (NASDAQ:MSFT) wasn’t spared from the tech selling fervor. In fact, Microsoft stock dropped an even sharper 2.4% on the day. That made for quite a reversal, as Microsoft had reached a new all-time closing high on Monday.

What caused tech’s outlook to sink on Tuesday, leading to a dramatic reversal for Microsoft stock? To put it simply, the White House is creating more uncertainty for America’s large companies.

Qualcomm Deal Blocked

Singapore-based semiconductor Broadcom Ltd (NASDAQ:AVGO) announced plans to take over rival Qualcomm, Inc. (NASDAQ:QCOM) months ago. The deal was subject to all sorts of complications. Qualcomm didn’t want to sell, shareholders demanded a higher offer, other bidders lurked in the shadows. In all, it was a great Wall Street soap opera.

But President Trump put a decisive end to it Monday. The Committee on Foreign Investment in the U.S. — or CFIUS — issued a block on the deal, which Trump signed. This prevents Broadcom from consummating the deal, or any similar deal, for Qualcomm going forward. CFIUS claimed that the deal would be a national security threat. Qualcomm is heavily involved in doing R&D for 5G (and presumably 6G and beyond going forward). Had Broadcom’s deal succeeded, they likely would have shuttered much of Qualcomm’s research department, leaving mainly Chinese competition to set mobile networking standards going forward.

Negative Implications for Tech

While it’s up for debate whether or not Trump’s unprecedented move was prudent, it certainly is a huge deal for tech investors. Tech stocks sank steadily throughout Tuesday’s trading session in reaction, while other sectors of the market fared relatively better.

It’s not hard to see why. Until now, investors have largely assumed that Trump would benefit most if not all sectors of the American economy. But that may have been a naive belief. Trump seemingly structured the tax bill in a way to benefit red states and punish voters in places that didn’t support his campaign. His trade policy similarly seems focused on benefited ailing red state industries, while having a much less favorable impact on other employers.

This brings us back to tech. Silicon Valley is no bastion of Trump supporters. And public disputes have reinforced this view. Just look at Alphabet Inc (NASDAQ:GOOGL) allegedly firing a conservative employee for publishing a memo that questioned the firm’s views on diversity.

Trump has long gone on about the media being against him. It’s not a far stretch for him to conclude that big tech, such as Google and Facebook Inc (NASDAQ:FB) are against his agenda as well. In fact, Mark Zuckerburg is widely rumored to be running for President in 2020 against Trump.

Microsoft’s Trump Problem

Microsoft has previously taken a stance against the President. Last fall, before the tax bill passed, Microsoft’s lobbyists said that passing an immigration reform bill to keep the Dreamers was more important than tax reform. Microsoft swore to defend their 39 employees who were Dreamers, stating: “In short, if Dreamers who are our employees are in court, we will be by their side.”.

While a strong stance ethically, it was a questionable business move. Microsoft stood to make billions if tax reform passed, whereas 39 employees are a drop in the bucket to a company of that size.

Tuesday afternoon brought further confirmation of the riskiness of this strategy. According to Reuters, Trump is set to announced new tariffs specifically targeting $60 billion in Chinese technology and telecom products.

Generally, governments use tariffs to protect domestic manufacturing industries. In this case, though, Trump is going after big tech products. This may not sound bad at first; however, keep in mind that China will almost certainly hit the US back with similar retaliatory tech tariffs. For Microsoft, the world’s leading software vendor, that’s a disastrous outcome. Needless to say, a tech trade war between China and the US would lead to great pain for Microsoft stock going forward.

Microsoft Stock: Beware of More Political Drama

Last August, I suggested that a move to $100 could be in the cards for Microsoft. It just about got there — Microsoft stock hit $97 this week before Tuesday’s slide. But the triple-digit celebration may have to wait a while longer now.

Until recently, investors assumed that Trump’s economic moves would be good for everyone. But that view may have to be revised. Trump appears willing to pick winners and losers. And the tech industry isn’t likely to fare well under such a paradigm. Tech companies have made many jobs in more conservative areas obsolete due to new technology.

The tech companies have then used their dollars and influence to go into advocacy mode for policies such as immigration reform that run contrary to Trump’s wishes. Throw in thought leaders such as Zuckerburg threatening to take Trump’s job, and it’s not hard to see why tech may get rough treatment from the current administration.

Those concerns were largely theoretical, but, now, they’re suddenly playing out. Trump is blocking big deals such as the Qualcomm buy and Ant Financial’s attempt to snap up payments processor MoneyGram International Inc (NASDAQ:MGI). That reduces the vitality of the tech industry and lowers the valuation of the sector across the board, as it hampers M&A premiums. On top of that, Trump is now threatening to throw some tech-specific tariffs at the industry’s leading trading partner — China.

As Bloomberg’s Megan Mccardle warned earlier this year, “Silicon Valley will pay the price for its lefty leanings.” Given Trump’s moves against the tech industry this week, she appears to have been right. For MSFT stock, along with the FAANGs, let’s hope the tech industry and Trump reach a truce soon. Otherwise, the selling in tech stocks could accelerate in coming weeks.

At the time of this writing, the author held QCOM stock. He had no positions in any of the other aforementioned securities. You can reach him on Twitter at @irbezek.