Why Trump's tariffs are so bad for Big Tech
President Trump’s sweeping new slate of tariffs is poised to strike a blow at the tech industry, as massive import taxes on China and Taiwan disrupt trade flows that are central to tech firms’ business models.
Trump announced tariffs upwards of 30 percent on both China and Taiwan on Wednesday as part of an expansive lineup of tariffs targeting imports across the board.
Tech companies who depend extensively on manufacturing and supply chains that run through China and Taiwan are expected to be hit hard by the country-specific tariffs that go into effect next week.
"Today has actually been quite devastating. I think there’s a lot of head scratching happening in the tech sector,” said Dave Warrick, executive vice president of Overhaul, a software-based supply chain solutions company.
Major tech stocks sank Wednesday following Trump’s announcement that he plans to place a 10 percent baseline tariff on all imports, alongside higher tariffs on dozens of countries considered the “worst offenders” when it comes to trade barriers.
China will be hit with a 34 percent tariff, on top of the 20 percent tariffs levied on Beijing over the past two months. Taiwan is facing a 32 percent import tax, while goods from the European Union (EU) will encounter a 20 percent tariff upon entry into the U.S.
Apple’s stock took the hardest hit, tumbling 9 percent on Thursday and wiping out more than $300 billion in value to mark its worst day since March 2020. The iPhone maker is expected to be particularly affected by the tariffs given that most of its products are produced in China.
About 80 percent of Apple products are made in China, including 90 percent of iPhones, 80 percent of iPads and 55 percent of Mac computers, CNBC reported.
“While Apple has diversified its supply chain to other parts of the world including Vietnam, India, and the US...the hearts and lungs of the Apple supply chain are cemented in Asia,” Wedbush Securities analysts wrote in a separate note Thursday.
India accounts for 10 to 15 percent of iPhone production, while 20 percent of iPads and 90 percent of wearable products, like Apple Watches, are produced in Vietnam, according to CNBC.
Vietnam is set to face one of the highest tariffs under Trump’s plan at 46 percent. The administration also plans to levy a 26 percent import tax on goods from India.
Apple announced in February that it plans to invest more than $500 billion in the U.S. and hire over 20,000 people over the next few years.
However, Wedbush Securities analysts warned that it would be costly and time-consuming for the tech giant to move manufacturing stateside, estimating it would take three years and $30 billion to move just 10 percent of Apple’s supply chain to the U.S.
“For US consumers the reality of a $1,000 iPhone being one of the best made consumer products on the planet would disappear,” they wrote.
The cost of consumer technology across the board is likely to rise under Trump’s tariffs, given America’s heavy reliance on countries like China for smartphones, tablets and laptops.
Given the substantial level of tariffs that tech companies are facing, it would be difficult for them not to pass on some of the costs on to consumers, which could discourage them from buying these items, Warrick said.
“These tariffs are going to put technology further out of reach for too many Americans,” Chamber of Progress CEO Adam Kovacevich said in a statement. “Trump has taken a sledgehammer to stable prices for smartphones, tablets, and laptops that we all use to power our lives.”
While semiconductors are exempted from Trump’s tariffs for now, they are likely to feel the pinch through more indirect means, said Bernstein senior analyst Stacy Rasgon. Most semiconductors enter the U.S. inside other products that will be subject to the latest slate of tariffs, he noted.
“The issue is demand destruction,” Rasgon told The Hill. “These things all of a sudden get more expensive, and you sell less of them.”
Bernstein estimated that computer equipment and smartphones will face a tariff rate approaching 40 percent. The U.S. imported $195 billion worth of computer equipment and $114 billion worth of wireless phones last year, according to a Bernstein research note Thursday.
Trump's tariffs could also weigh on the push by Big Tech to build new data centers.
Major tech firms have invested billions of dollars into building out their capacity to develop artificial intelligence (AI) — an effort that was already being called into question by the emergence of China’s low-cost DeepSeek models.
“These tariffs will make it much more expensive to essentially set up the operations of the data center given our reliance on imported wiring and things of that sort,” said Jason Miller, a supply chain professor at Michigan State University.
This comes as the Trump administration itself has sought to encourage investment in AI with its Stargate project alongside OpenAI, Oracle and SoftBank, which aims to invest $500 billion in AI infrastructure over the next four years.
One tech company that might be shielded from the worst impacts of the tariffs — Elon Musk’s Tesla. The electric vehicle firm produces all of its North American vehicles in the U.S. at factories in California and Texas, limiting its exposure to Trump's 25 percent tariffs on foreign vehicles and auto parts that went into effect Thursday.
However, like other exporters, Tesla has emphasized that it could feel impacts from retaliatory tariffs as other countries respond to the Trump administration’s recent trade moves.