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Trump’s Tariffs Will Be the End of Affordable Tech

Caleb Sama by Caleb Sama
April 9, 2025
in Editorial
Reading Time: 12 mins read
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Trump's tariffs

There was always a feeling that 2025 was going to be a tumultuous year after Donald Trump won the US presidential elections, especially for the global economy. In less than 100 days in office, Trump has implemented sweeping tariffs that have sent shockwaves through supply chains, stock markets, and ultimately consumer wallets.

What started as a 10% tariff on Chinese imports in February has escalated to an incredible 54% by April, with additional tariffs targeting other key manufacturing countries.

Tech companies are scrambling to adapt as the implications spread through global markets, raising serious questions about the future of tech innovation, pricing, and manufacturing.

I’ll break down in detail everything about Trump’s tariffs and why big tech, and ultimately consumers, should be worried.

What Are Tariffs and How Do They Work?

In simple terms, tariffs are taxes imposed by a government on goods entering (imports) or leaving (exports) a country. They come in two main forms: fixed-rate tariffs that apply a set percentage to all applicable goods, or variable tariffs that may change based on specific conditions or products.

When a company imports goods subject to tariffs, the tax must be paid upfront at customs before the shipment can be released. This immediate financial burden can’t be deferred – businesses must pay these costs before they can even begin selling the products domestically.

Tariffs are typically designed to protect domestic industries by making imported goods more expensive, theoretically encouraging consumers to purchase locally-made alternatives instead.

For example, a country wanting to nurture its domestic electronics manufacturing might impose tariffs on imported smartphones or computers, making the foreign options costlier compared to domestically produced devices.

Laptops
Raised laptop prices in the US will put strain on budgets for students and businesses.

However, the practical effects of tariffs can be complex and often controversial. Economists widely view them as problematic because they can lead to slowed economic growth, damage domestic industries reliant on imported components, and increase consumer prices without necessarily delivering equivalent benefits.

Tariffs also frequently trigger retaliatory measures from other countries, potentially spiraling into larger trade wars that disrupt global commerce.

A Timeline of Trump’s Tariffs

The current wave of tariffs began on February 1, when the Trump administration announced import taxes on goods from Canada, Mexico, and China, scheduled to take effect just three days later.

While the initial rates were set at 25% for Canadian and Mexican goods (with a lower 10% for Canadian energy resources) and 10% for Chinese imports, what followed was a rapid series of increases and expansions as follows:

  • February 4, 2025: The 10% tariff on Chinese imports began, while the Canadian and Mexican tariffs were delayed.
  • February 27, 2025: The administration announced its intention to raise Chinese import tariffs to 20%.
  • March 4, 2025: The higher 20% tariffs on Chinese imports took effect, along with the originally planned tariffs for Canada and Mexico (though the latter were subsequently delayed again).
  • March 12, 2025: A 25% tariff on all steel and aluminum imports took effect, increasing the aluminum tax from the previous 10%. No exemptions were permitted.
  • April 2, 2025: The administration announced its most sweeping measures yet – an additional 34% tariff on Chinese goods (bringing the total to 54%), plus country-specific tariffs including Vietnam (46%), Japan (24%), South Korea (34%), Taiwan (32%), and European Union countries (20%). A minimum 10% tariff would apply to imports from almost all other countries worldwide, including Kenya.

By April 9, the full suite of these new tariffs had taken effect, creating what one industry insider described as “chaos” for importers, manufacturers, and retailers.

What Is the Rationale Behind These Tariffs?

The Trump administration has offered several justifications for these sweeping tariffs. The initial February tariffs on Chinese goods were tied to allegations of China’s role in aiding illegal immigration and the fentanyl crisis.

Fentanyl
Fentanyl made from Chinese chemicals is killing tens of thousands of Americans.

However, the broader tariff package has been framed as addressing what the administration characterizes as unfair trade practices by various countries.

The “reciprocal” tariff approach appears designed to pressure trading partners to reduce their own trade barriers against American goods.

White House Press Secretary Karoline Leavitt emphasized this stance, stating that countries “who have chosen to retaliate and try to double down on their mistreatment of American workers, are making a mistake.”

Some academic perspectives suggest that strategically implemented tariffs could potentially benefit the U.S. long-term by rebuilding domestic manufacturing capabilities.

Nick Vyas argues that over the past three decades, America has shifted from a “creation mindset to a consumption mindset,” becoming overly dependent on foreign manufacturing, particularly from China.

However, critics point out that the rapid implementation and broad scope of these tariffs have created tremendous uncertainty rather than strategic repositioning of manufacturing capabilities, which would require years of planning and investment.

What Impact Do These Tariffs Have on the Tech Industry?

Immediate Price Increases

The most immediate and visible impact of these Trump tariffs has been on consumer prices.

The tech industry operates on notoriously thin margins – typically between 6% and 15% for hardware products, compared to software’s comfortable 70-80% margins. This economic reality means tech companies simply cannot absorb a sudden 54% tax increase on Chinese imports.

Manufacturers and retailers have been blunt about the inevitable consequences. Best Buy’s CEO Corie Barry warned early on that price increases for American consumers would be “highly likely.”

Acer’s chief executive, Jason Chen, announced the company would raise prices by 10% to cover the costs. These statements came when tariffs were still at their lower initial rates – the subsequent increases have only intensified the pricing pressure.

The potential scale of these increases is massive. Analysts from Rosenblatt Securities estimated that Apple might need to raise iPhone prices by as much as 43% if it passes on the increased component costs to consumers.

This could potentially push Apple’s top-of-the-line iPhone 16 Pro Max with 1TB storage from its current $1,599 to approximately $2,300 (~ KES 298,000).

iPhone 16
Trump’s tariffs could potentially slow Apple’s market growth due to high iPhone prices.

Similarly, TechInsights suggested that the iPhone 16 Pro’s hardware costs could jump from $550 to $850 due to tariffs, potentially resulting in a $300 retail price increase if Apple maintains its profit margins.

Reports indicate that consumers have already begun “panic buying” tech products in anticipation of these price hikes, with Apple Store employees noting significantly increased foot traffic from customers rushing to purchase iPhones before tariff-induced price increases take effect.

Supply Chain Disruption

The tech industry’s global supply chains have been carefully optimized over decades, with China serving as the manufacturing hub for an overwhelming majority of electronics. Unfortunately, Trump’s tariffs have thrown these established networks into disarray.

Apple’s production illustrates this challenge perfectly: approximately 80% of Apple products are made in China, including 90% of iPhones, 80% of iPads, and 55% of Mac computers.

While the company has begun diversifying its manufacturing to countries like Vietnam (which produces about 90% of Apple Watches) and India (which handles 10-15% of iPhone production), these alternatives now face their own substantial tariffs – 46% for Vietnam and 26% for India.

Wedbush Securities analysts estimated it would take Apple approximately three years and $30 billion to move just 10% of its supply chain to the US, indicating the enormous scale and complexity of restructuring global tech supply chains.

Stock Market Reactions

Financial markets have responded dramatically to the tariff announcements. Major tech stocks took giant hits, with Apple experiencing its worst day since March 2020, when its stock tumbled 9%, wiping out more than $300 billion in market value.

Meta and Nvidia each saw their stock prices fall around 5%, while Amazon dropped about 6% following the April tariff announcements.

These market reactions are simply reflections of investors’ concerns about both reduced consumer demand due to higher prices and squeezed profit margins as companies absorb portions of the tariff costs.

The broader economic impact has led Goldman Sachs to raise the probability of a U.S. recession in the next 12 months to 35%, up from 20%.

US recession
The last US recession was in 2008 and was triggered by a housing market collapse and financial sector crisis.

E-commerce Disruption

Beyond hardware manufacturers, e-commerce platforms face their own set of challenges from these tariffs.

The Trump administration has moved to eliminate the “de minimis” exemption, which previously allowed American consumers to import goods valued under $800 without paying duties.

This exemption has been crucial for Chinese shopping platforms like Shein and Temu, as well as for U.S. marketplaces like eBay, Etsy, and Amazon that feature China-based sellers.

The removal of this exemption, scheduled for May 2, threatens to fundamentally alter the economics of online shopping. Ram Ben Tzion, cofounder of digital shipment vetting platform Publican, described the potential impact as “gigantic,” saying it “could dramatically change e-commerce” and seriously affect major online retailers.

Amazon, which recently launched a division specifically for affordable made-in-China products to compete directly with Temu and Shein, appears especially vulnerable to this change.

Slowdown in Innovation

Industry insiders have warned that economic instability could lead to reduced investment in new products and technologies. Without a predictable business environment, companies may become more risk-averse, limiting resources devoted to research and development.

This potential innovation slowdown could manifest in several ways, including:

  • Fewer choices for available models across product lines
  • Less aggressive advancement of standard features
  • Delayed adoption of emerging technologies like Wi-Fi 7 and PCIe 7.0
  • Reduced investment in experimental or cutting-edge products

For the tech industry, which thrives on rapid innovation cycles, this potential slowdown presents a grave long-term concern that could extend well beyond the immediate pricing effects.

Semiconductors Are Exempt – At Least For Now

Unsurprisingly, Trump’s administration has temporarily exempted semiconductors from country-specific tariffs, particularly the 32% tax on Taiwanese imports.

This exception is crucial for U.S. companies like Nvidia, which relies on Taiwan Semiconductor Manufacturing Company (TSMC) to produce advanced chips for AI graphics processing units.

Nvidia GPU
TSMC leads global chip production with cutting-edge semiconductor manufacturing for GPUs.

However, this reprieve may be temporary. In mid-February, President Trump proposed a 25% tariff on semiconductors starting April 2, with the possibility of raising them further over time.

While this specific tariff wasn’t implemented in the April package, the threat remains on the horizon, creating uncertainty for an industry that serves as the foundation for virtually all modern technology.

Impact on Data Centers and Development of AI

Another major concern is that Trump’s tariffs could potentially hamper the tech industry’s massive investments in AI infrastructure.

Major tech companies have committed billions to building new data centers and expanding AI capacity, a push that now faces increased costs for essential components and materials.

This challenge comes at a very sensitive time, as U.S. tech companies are already facing increased competition from China’s emerging low-cost AI models like DeepSeek.

The tariffs may inadvertently make it more difficult for American companies to maintain their competitive edge in this critical emerging field.

Jason Miller, a supply chain professor at Michigan State University, noted that “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.”

This increased cost structure directly conflicts with the administration’s own Stargate project alongside OpenAI, Oracle, and SoftBank, which plans to invest $500 billion in AI infrastructure over the next four years.

Global Ripple Effects

While Trump’s tariffs directly target imports into the US, their impact extends far beyond American borders. The interconnected nature of global tech supply chains means that higher production and logistics costs will likely affect consumers worldwide in several ways.

  1. Cross-border purchasing impacts: Consumers outside the U.S. who purchase from retailers using U.S.-based fulfillment centers will encounter higher prices reflecting the tariff costs.
  2. Global pricing adjustments: As tech vendors adjust their worldwide pricing strategies to accommodate increased production costs, consumers in other countries may see price increases even on products not directly shipped through the U.S.
  3. Manufacturing displacement: As companies relocate production to avoid certain tariffs, manufacturing capacity and employment may shift between countries, creating economic winners and losers across the global economy.
  4. Retaliatory tariffs: Other countries’ responses to Trump’s tariffs may create additional trade barriers affecting global commerce. China has already threatened further retaliation, including potential measures targeting U.S. agricultural products, poultry imports, cooperation on fentanyl control, market access for services, and intellectual property earnings.

So, What Does the Future Look Like for Big Tech?

The tech industry now operates in an environment of profound uncertainty. Companies cannot confidently forecast costs, prices, or demand as the tariff situation continues to evolve.

Most manufacturers and retailers are still working with their partners to determine appropriate pricing strategies, but these calculations may require constant revision as policies change.

This uncertainty extends to consumers, who face difficult decisions about when to make purchases. Current wisdom suggests buying sooner rather than later to avoid price increases, but the unpredictable nature of the situation makes even this advice tentative.

While some logistics and data analytics companies may find new business opportunities in helping clients wade through the complexities of tariffs, most industry participants view the current situation as challenging at best.

Flexport
Logistics companies will find opportunity in these tariffs by optimizing routes and diversifying supply chains.

Even companies that typically benefit from market disruption seem wary of the current level of instability, with Flexport CEO Ryan Petersen saying, “Historically all chaos has been good for Flexport. This might be too much, though.”

As the tech industry and consumers adapt to this new reality, the only certainty is that the full impact of Trump’s tariffs will continue to unfold in the months ahead, reshaping product availability, pricing, and potentially the very structure of global technology manufacturing and distribution.

Sources

WIRED
PCWorld
CNN

Tags: AppleDonald TrumpiPhone
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Caleb Sama

Caleb Sama

Friendly neighborhood films, games, and tech reviewer. Expect dad jokes - lots of dad jokes.

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