For the tech giants building out the next generation of AI, 2025 was already going to be an expensive year. President Trump’s tariffs might balloon those price tags further—but how much remains unclear.
Microsoft, Google, Meta, and other big AI companies have pledged to spend hundreds of billions of dollars on AI infrastructure projects this year. Much of that infrastructure consists of data centers—containing Nvidia chips, computer parts, cooling and power equipment, and other components—all of which could see various impacts from tariffs.
Where the chips fall: Right now, semiconductors are exempt from reciprocal tariffs, though the administration embarked on a probe this week to assess levying them in the coming weeks or months. Trump has also exempted certain electronics, including computer parts, a move Commerce Secretary Howard Lutnick told ABC News is temporary.
Nvidia, the biggest supplier of AI chips, is shielded from some tariff impact because it assembles many of its imported semiconductors into graphic processing units (GPUs) in Mexico and Canada, also currently exempt from tariffs through the United States-Mexico-Canada trade agreement, a report from analysts at Bloomberg Intelligence said.
Anil Khurana, a professor focused on globalization at Georgetown University’s McDonough Business School, said it helps that the supply chain for processors is not as complex as some other sectors.
“Fortunately for the chip industry, there’s not too much criss-cross of components back and forth, unlike the auto industry, which is traveling around the world multiple times,” Khurana told Tech Brew. “You know, chips come in, they clearly have to be tested, but often they come as assemblies as well.”
Nvidia also said this week that it would begin manufacturing its Blackwell chips at TSMC’s plant in Arizona, as well as AI supercomputers at plants in Texas in partnership with Foxconn and Wistron. Khurana said that capacity will be dwarfed by the amount of processors that Nvidia will need to continue to import, however. Nvidia will also likely turn to more automation in assembly, he said.
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“Expect heavily automated electronic facilities, including chip plants in the US, in the next two to three years,” Khurana said.
Price hikes downstream: Any cost increases from tariffs on chips and processors will likely be partially passed on via price increases to AI hyperscalers like Microsoft and Google, and even end consumers, who might see AI subscription prices increase, Khurana said.
It’s also possible that wider economic uncertainty might affect tech giants’ core businesses—like advertising or software—which could lead to prioritization decisions around AI and potentially affect demand.
Forrester analyst Mark Moccia said businesses should expect the price of cloud services and subscription software to increase as underlying components face cost hikes.
“While not currently subject to tariffs, the cost of cloud, software as a service, and other services could go up as their underlying costs increase and exchange rates fluctuate,” Moccia said in an email. “Service providers and even software vendors will find ways to recoup costs, even for contracts seemingly unavailable for renegotiation.”
Moccia said the impact will evolve over the course of the year and advised businesses to plan for various scenarios.
“The new US tariffs have set the stage for increasing IT costs. The impacts will evolve over the next two to three quarters as vendors consider, develop, and roll out new pricing strategies,” Moccia said. “To navigate these challenges, identify worst-case, best-case, and likely scenarios, along with the specific actions needed to mitigate the heightened cost pressures entailed in each.”