Earlier this month, US President Donald Trump announced significant tariffs on imports from various countries, including China, Mexico, and Canada, aiming to reduce trade deficits and bolster American manufacturing. These tariffs include a baseline 10% duty on nearly all imported goods and 20% on those from the European Union (EU).
Although the president has stipulated that these measures will revive domestic industries and do their part to restore the US economy, experts warn that this may well not be the case, and it is likely to affect the tech sector in numerous ways.
The Impact of Trump’s Tariffs
President Trump’s tariffs include a baseline 10% duty on nearly all imported goods and 20% on those from the European Union (EU). Chinese imports will face some of the highest charges with a 34% tariff.
The impact of these tariffs spread far and wide, with the most notable being increased inflation, consumer prices, and perhaps most worryingly, global trade wars. According to The Guardian, world leaders are reportedly already mulling over how best to respond to the sweeping tariffs, hyper-aware of the risks of trade wars and recession if the wrong choice is made.
A Tumultuous Stock Market
Speaking of recessions, global finances and the stock market have already been affected heavily by this news, with JPMorgan very recently announcing that the global recession risk increased to 60% from 40% as a direct result of these tariffs.
Not only that, but the S&P 500 has declined nearly 14% year-to-date, while the Nasdaq Composite has dropped 19% over the same period. Futures for major U.S. indices, including the S&P 500, Dow Jones Industrial Average, and Nasdaq, have also seen substantial declines, reflecting investor apprehension.
For the tech sector, these tariffs have resulted in quite a blow after their monumental rise at the start of Trump’s presidency this year, thanks to his pro-tech and pro-deregulation stances. For example, Apple shares fell by 3.2% in premarket trading on April 7, 2025, due to concerns over increased production costs from tariffs, and Nvidia’s stock experienced a nearly 15% decline over two days, attributed to worries about tariffs affecting tech products like servers and computers.
What Does This Mean for the Tech Sector?
Aside from the potential of increased inflation, consumer costs, and trade wars that nearly every industry will face the brunt of if they come to fruition, the tech industry also has some impacts unique to the sector.
For one, as aforementioned, these tariffs could significantly affect the sector by increasing the costs of imported components like semiconductors, electronic parts, and hardware, potentially raising prices across the board for both consumers and companies.
As described by The Tax Foundation, tariffs can “raise the cost of parts and materials, which would raise the price of goods using those inputs and reduce private sector output.”
“This would result in lower incomes for both owners of capital and workers. Similarly, higher consumer prices due to tariffs would reduce the after-tax value of both labor and capital income.”
Threat to the Global Market
Trade tensions are never a favorable outcome of economic turmoil, and the tech sector is likely to feel that substantially. Any further escalation may disrupt global supply chains, leading to delays and uncertainty for tech companies dependent on international manufacturing.
A Silver Lining
Although these tariffs may feel all-encompassing, that fortunately isn’t the case for the tech sector. As Trump’s tariffs specifically target physical imported goods, purely digital products such as software subscriptions, cloud services, and professional consulting services typically remain unaffected. This is good news for organizations like Salesforce and other SaaS providers.
However, the rise in technology and hardware costs is likely to have an indirect impact on the industry, which is something that many organizations are likely already keeping in mind.
Final Thoughts
The impacts of tariffs set out by the Trump Administration impact nearly every industry, and the tech industry is no exception.
Although these impacts do lean more towards the negative side, only time will tell how both the sector and the wider market will respond to these changes.
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