Big Tech appears unstoppable as market valuations skyrocket, artificial intelligence (AI) investments balloon into the hundreds of billions of dollars, and the U.S. government backs off regulatory oversight as tech CEOs cozy up to President Donald Trump; and companies seemingly carve up the world at their whim to make AI claims.
But President Trump’s recently enacted 10% tariffs against China imports, on top of existing levies, and China’s response of tariffs of 10% to 15% on certain U.S. goods, should give Silicon Valley pause, according to a recent report and trade experts.
Without any product exemptions, the newly proposed tariffs will cover a broader scope of tech products, representing a higher proportion of overall global IT spending than the tariffs levied during President Trump’s first term, S&P Global Ratings analysts said in the report, “Proposed Tariffs Could Hurt The Global Tech Sector If Levied Too Long.” [Worldwide tech spending is ready to defy economic uncertainty and trade risks, and rise 9% this year because of AI and cloud investments. Market researcher Gartner pegs worldwide IT spending at $5.62 trillion in 2025, up about 10% from 2024.]
One of the report’s chilling observations is whether the proposed tariffs are the beginning of a deteriorating geopolitical environment. “The longer the tariffs are in place, the longer lasting the chilling effect on the macroeconomy and IT spending behaviors could be,” S&P Global Ratings credit analyst David Tsui said in a report.
Companies with products in high demand or strong brand loyalty are expected to pass along higher costs to customers. Even those companies with so-called elastic customer demand, in which there are products with close substitutes, are likely to endure reduced consumption or delayed purchases, adding to global economic uncertainty, the report found.
Two tech giants in particular may be susceptible to the U.S.-China trade war, based on recent Wall Street financial notes.
Most of Apple Inc.’s products are made in China, and production in the country accounts for about 90% of Apple’s capacity, estimates Evercore analyst Amit Daryanani. Should Apple not get an exemption to the additional 10% tariff on China, the company’s earnings per share would be impacted 3% to 4%, he said.
The case for Amazon.com Inc. A prolonged trade war may chip away at corporate profits, says Morgan Stanley analyst Brian Nowak. He estimates two-thirds of the retailer’s first-party merchandise cost of goods sold is non-grocery, with 40% exposure to China. “It will be important to monitor import cost pressure pass through vs. absorption,” Nowak said.
Nowak said 11% of eBay Inc.’s sales come from China-based sellers.
On a wider scale, tariffs pose plenty of ticklish obstacles for ITSM teams, impacting everything from budgeting (increased costs for IT equipment and software) and procurement (delays, supply chain disruptions) to service delivery challenges and the necessity to shift to alternative suppliers or cloud-based solutions.
“While tariffs act as barriers, the real problem is our disconnected supply chain networks. Right now, companies hoard data like Smaug guarding his treasure, making it harder to adapt when policy shifts,” said Joe Hudika, a global supply chain expert and author of the forthcoming “The AI Ecosystems Revolution.”
Hudika believes AI-powered, anonymized data-sharing can help businesses anticipate and adapt to disruptions — whether from tariffs, regulations, or unexpected events—before they occur.
“Tariffs will increase the cost of nearly all hardware, since components are sourced from China and many products are assembled there as well. But moving sourcing out of China has been an obvious choice for a few years. Few did so. But now there is no choice but to scramble,” Appvance CEO Kevin Surace said of the potential impacts of proposed tariffs on IT, AI and cybersecurity.
