US tariffs: How Trump’s new tax announcement is impacting the tech industry

The recent implementation of United States (US) tariffs imposed by President Donald Trump on imported goods has sent shockwaves through the global economy, with the tech industry being no exception.

With major tech players such as Alphabet, Amazon, Apple, Meta, and Microsoft, also known as the Big Five tech companies, already feeling the effect, it is important to understand the impact of these tariffs and how they could reshape the overall tech landscape.

It’s worth mentioning that due to the tariffs announcement Elon Musk, the world’s most-richest person has taken the biggest hit, with his net worth declining by $130 billion this year.

Meta CEO Mark Zuckerberg's net worth also declined by $17.9 billion followed by Amazon's founder Jeff Bezos who lost $15.9 billion as the company's shares tumbled 9%.

What are US tariffs?

Tariffs are taxes imposed on imported goods and services, aimed at discouraging consumption and promoting domestic production.

The Trump administration has been using tariffs as a tool to address trade deficits and perceived unfair trade practices, with significant implications for the tech industry.

Why is the Trump administration imposing tariffs?

The Trump administration has argued that tariffs will boost the US economy, protect jobs, and reduce the country's reliance on foreign goods.

Meanwhile, critics have argued that tariffs can lead to higher prices, strained relations, and disrupted global supply chains.

Tech giants affected by US tariffs

Notably, the tariffs have already started to affect major tech companies such as Apple, which relies heavily on Chinese imports. 

The Cupertino-based tech giant is diversifying its supply chain and investing in US manufacturing.

On the other hand, the GPU leader Nvidia, despite initial concerns, believed the impact of tariffs won't be significant but is still investing in domestic manufacturing.

Similarly, the South Korean tech giant Samsung is benefiting from producing TV units in Mexico, which may avoid tariffs, but its smartphone production in Vietnam faces a steep price jump.

Moreover, other tech giants such as Microsoft and Qualcomm are also adjusting their supply chains and exploring new strategies to dilute the impact of tariffs.

Notably, the tariffs could also cast a shadow over OpenAI, Oracle, and Softbank's ambitious plans to develop major new data centers to power AI tools.

The tariffs also have far-reaching implications beyond the US and China as countries like the UK, and India are likely to be affected, with more trade wars on the horizon.

Disruption in supply chains

With the interconnected world economy, disruptions in one region such as the US or China will highly impact consumers worldwide.

US tariffs have led suppliers to adjust their pricing strategies, invest in domestic manufacturing, and build new facilities.

It’s been chaos since President Trump announced tariffs, starting a trade war between the US and other countries, including China, Taiwan, and Vietnam on which the American government is now imposing an increasing number of taxes on goods arrival.

Smartphones, laptops exemption from US tariffs

That said, the Trump administration’s recent announcement of exemptions for certain tech products, including smartphones, laptops, and semiconductors from the tariffs imposed on imported goods is seen as a relief for tech giants such as Apple, Nvidia, and US consumers who would have faced higher prices for these products.

Trump's decision might be seen as a result of efforts by big tech billionaires, including the Tesla CEO Elon Musk, who recently joined the Trump administration as a Senior Advisor to the US president and the head of the Department of Government Efficiency (DOGE).

With this exemption, tech companies can breathe a sigh of relief, at least for now.

US tariffs impact on the gaming industry

Furthermore, since the US tariffs announcement, the gaming industry is also in a vulnerable condition, with companies like Nintendo and Sony facing significant challenges. 

Nintendo has delayed preorders for its highly-anticipated gaming console Nintendo Switch 2 due to the tariffs announcement.