What tariffs might mean for the tech industry

The Trump administration claims it wants the US to continue to lead the world in AI. But some of the president’s latest tariff proposals could be tricky for the tech industry to navigate.

He told reporters at Mar-a-Lago last week that he plans to levy a 25% tariff on semiconductors, as well as on auto parts and pharmaceuticals, in April as part of a bid to return manufacturing to the US. He said the rate would “go very substantially higher over the course of a year.”

The Trump administration has already imposed 10% tariffs on China, which has retaliated with its own tariffs.

A research note that analysts at PitchBook published earlier this month attempted to break down what tariffs might mean for different tech sectors. For enterprise software-as-a-service companies—a category that includes AI—the impact of tariffs on China specifically may be modest, but would drive up data center costs in a year when tech companies have signaled that they plan to spend big on AI infrastructure.

“Tariffs on China would still increase the cost to build data centers (servers, semiconductors, metals, rare earth), ahead of a large capital-expenditure year, thus increasing consumer prices,” the analysts wrote. “Market volatility could slow IPO progress, including on SaaS companies.”

A tariff on semiconductors would also likely harm the EV market, which relies on chips for high-power systems in EV motors, according to the report. The analysts said EV supply chains rely “heavily on Chinese components across a variety of subsystems.”

“Pretty much any electrical component that moves—motors, actuators, etc.—depend heavily on Chinese components and materials,” the report said.

Tariffs will also likely create hurdles for the climate tech industry across the board, according to PitchBook. That would span energy storage and power grid technology, including transformers, which rely on imports.

“Clean energy, energy storage, power grid technologies could feel the effects of tariffs,” the authors wrote. “Canada and Mexico are the largest US import sources for steel, and China and Germany are also in the top 10. China also exports wind turbine components and solar modules.”

The proposed semiconductor tariff also comes as the Trump administration is set to fire staff at the National Institute of Standards and Technology responsible for overseeing the Chips for America program, which incentivizes domestic production of semiconductors, Axios first reported last week.