How U.S. tariffs are reshaping the tech landscape

Overview of U.S. tariffs on tech

At the most basic level, a tariff is a form of taxation.

Tariffs are a type of tax that has been used worldwide for centuries. They are imposed on imported goods and aim to make foreign products more expensive and less competitive than domestically produced items.

Trump aims to incentivize businesses to move manufacturing to the U.S., which he expects will create jobs and strengthen the economy.

The reality is a bit more nuanced. Tariffs are not paid by the target on which they are imposed. Instead, they are paid by the distributors that transport goods into the country that imposed the tariff. That cost is then usually passed on to consumers through higher prices. In the tech sector, there is additional complexity as products assembled domestically often contain imported components that remain subject to tariffs, adding layers of cost.

The tariffs imposed by Trump are also not a one-size-fits-all approach. Four primary components affect different parts of the technology industry.

1. Universal baseline tariff. A 10% tax on all imports, effective April 5, 2025.
2. Reciprocal tariffs. These are country-specific rates calculated based on bilateral trade balances. For example, China faces a combined rate of 145%.
3. Sector-specific levies. A 25% tax on steel and aluminum.
4. Retaliatory adjustments. On April 11, 2025, the administration announced exemptions for semiconductors and consumer hardware but maintained higher rates for most goods from China.

The 2025 tariffs imposed by the Trump Administration are not the first time the technology industry has been affected by tariffs. In 1987, the U.S. imposed a short-lived 100% tariff on Japanese electronics. The U.S. has also had larger tariffs on components such as solar panels since 2018.

Integrated supply chain effect

In the modern technology landscape, sole-source supplying of any fully finished technology device is a rarity. Modern technology is typically composed of components that come from many different locations.

Even if a product is labeled "Made in USA," the complex nature of technology supply chains means numerous components within that product originated in places other than the U.S. For example, a smartphone assembled in Texas might contain a processor manufactured in Taiwan, memory chips from South Korea, a display panel from Japan and various smaller components from China. This complex component sourcing means complete insulation from tariffs would require domestic assembly and a full domestic supply chain.

Challenges in semiconductor production

The semiconductor industry is particularly at risk from tariffs. Semiconductors are found in most electronics today -- including automobiles. In 2025, most semiconductors manufactured globally will be made outside the U.S. The most prominent vendor in the world is TSMC (Taiwan Semiconductor Manufacturing Company), which manufactures most of its chips in Taiwan.

Like many modern manufacturing activities, semiconductor manufacturing is a complicated process. It requires raw materials, including rare earth minerals such as high-purity quartz. The U.S. does produce some of the needed materials, though it has faced challenges due to natural disasters. In September 2024, production in the largest quartz mines in Spruce Pine, N.C., was disrupted due to the effects of Hurricane Helene. Full production at the mines is not expected to fully resume until the end of the second quarter of 2025.

Though the U.S. has rare earth mineral resources, China has larger resources and accounts for a larger global market share.

Rare earth minerals needed for semiconductors include the following:

• High-purity quartz
• Gallium
• Germanium
• Dysprosium
• Neodymium

Beyond the raw materials, semiconductor manufacturing relies on fabrication facilities -- or semiconductor fabs. These fabs cost more than $20 billion to build and require years of development before becoming fully operational.

TSMC announced plans to expand U.S. manufacturing, as have Intel and Samsung. Proposed plants are set to be in Arizona, Texas and Ohio, but these facilities won't be operational for several years.

Efforts to bring more silicon manufacturing to the U.S. predate the Trump Administration. Former President Joe Biden signed the CHIPS Act in 2022, promising to build out U.S. semiconductor manufacturing capacity. The Trump Administration is taking its own view on the CHIPS Act to help further accelerate the process of building out semiconductor manufacturing in the U.S.

Tech companies affected by tariffs

Tech companies of all sizes are affected by the Trump Administration tariffs, including the following:

Amazon

Amazon faces multiple effects from the tariffs. Amazon's hardware -- including its Echo smart speaker, Ring smart home and Kindle e-book reader platforms -- is all built offshore.

Like Microsoft's Azure, AWS is affected by larger input costs for the hardware it needs for data center operations.

Apple

Apple faces significant exposure to the new tariffs. In 2025, most of Apple's hardware products --including iPhones, iPads and MacBooks -- are assembled in China and risk large tariffs on Chinese imports. On April 14, 2025, the Trump Administration issued an exemption for some consumer electronics, including Apple's products -- though it's unclear how long the exemption will last.

The risk of tariffs has forced Apple to accelerate plans to diversify its manufacturing base beyond China -- exploring options in countries such as India, Vietnam and Malaysia.

Intel

Intel's global operations and supply chain face increased raw materials and component costs. Intel has been working to expand its U.S. manufacturing capacity, but it requires significant time and investment to implement fully.

Microsoft

While Microsoft is less exposed to hardware tariffs than companies such as Apple and Nvidia, its Surface line of products and Xbox gaming consoles are manufactured globally and are at risk from the new tariffs.

Microsoft's Azure cloud computing infrastructure requires a lot of hardware -- including Nvidia chips -- which are affected by tariffs. Microsoft has been exploring ways to mitigate these effects through supply chain adjustments and potential price increases on hardware products.

Nvidia

Nvidia has a global manufacturing supply chain that helps the company produce AI accelerators and GPU hardware technologies.

Nvidia doesn't own manufacturing facilities but contracts with companies such as TSMC. The new tariff structure significantly affects Nvidia's cost structure, potentially affecting the price and availability of its critical products for data centers and AI applications.

On April 14, 2025, Nvidia announced it would invest $500 billion to manufacture AI chips in the U.S. The announcement came as the Trump Administration continued pushing businesses to reshore their manufacturing facilities.

Samsung

As a South Korean company, Samsung has somewhat different exposure to U.S. tariffs than its U.S. counterparts. However, the global nature of Samsung's operations means it still faces challenges from the new tariffs. The company manufactures many consumer electronics in various countries, subject to increased U.S. import taxes. Samsung's semiconductor business also supplies chips to many technology companies -- including American ones.

Supply chain adjustments

Businesses are looking at existing supply chains and considering various options and adjustments.

Given the complexity of modern supply chains in the tech sector, implementing adjustments will likely be time-consuming. During the COVID-19 pandemic, global supply chains were also disrupted from 2020 to 2022 -- in some cases, while organizations scrambled to find alternative suppliers with full operational capacity.

While nearly every nation on Earth is subject to tariffs, some countries are more at risk. China is a primary target of Trump's tariff agenda. As such, organizations are increasingly looking to move supply chains away from China-based manufacturing.

Among the locations where tech vendors are looking to shift manufacturing are the following:

• Vietnam. While still subject to tariffs, the Vietnamese government appears more willing to work with the Trump Administration than with China. However, Vietnam lacks the manufacturing scale currently available in China.
• India. The Indian government has also been willing to negotiate with the Trump Administration and could be a location for more tech manufacturers, particularly for smartphone production.
• Onshoring. There is also renewed interest and activity across the tech sector for bringing more manufacturing and supply chain components back to U.S. soil.

Strategic responses from the tech industry

The tech industry has not sat idly by while the Trump Administration has announced and implemented tariffs.

Multiple technology leaders have directly contacted the Trump Administration regarding the tariffs. Apple CEO Tim Cook reportedly had talks with U.S. officials and convinced them to grant a temporary exemption for Apple products built in China.

The tech industry has employed several other strategies, in addition to direct lobbying of government officials, including the following:

• Vertical integration. Organizations are attempting to manufacture more in the U.S., such as TSMC's $100 billion investment in U.S.-based chip production.
• Tariff engineering. The tariffs are complex and have multiple categories. Some vendors have been working to adjust their product definitions to fit into lower-cost tariff categories.
• Inventory buffering. Before the tariff imposition date, some organizations stockpiled larger-than-usual quantities of products to avoid paying the additional costs.

Other industries affected

The tech industry isn't the only industry affected by the Trump Administration's tariffs. Other sectors include the following:

• Retail. This is likely to have a broad effect on the retail sector. Items such as toys, shoes and clothing -- made mainly in China -- will become more expensive. Grocery prices have also steadily increased.
• Healthcare and pharmaceutical. In the healthcare sector, medical devices, in particular, are at risk from tariffs, as they typically incorporate advanced technology components made in multiple countries. Pharmaceutical manufacturing relies on globally sourced ingredients, some of which come from China. Trump has also mentioned a forthcoming tariff on pharmaceuticals, but there is no additional information yet.
• Automotive. The auto sector is directly at risk with the imposition of a 25% tariff on non-U.S.-manufactured vehicles and auto parts. There is also a 25% tariff on all imported steel and aluminum. The tariffs are particularly challenging for electric vehicle manufacturers such as Tesla, as battery production and rare earth minerals essential for battery technology are heavily concentrated in China.
• Hospitality and travel. The tariffs are likely to affect discretionary spending, which will impact hospitality and travel in the U.S. Because of a decrease in demand from American consumers, airfare has even decreased -- 5.3% in March vs. the same time last year. Many international tourists have also stopped visiting the U.S. in opposition to the tariffs.
• Finance. The uncertainty surrounding the Trump Administration tariffs and their effect on the global economy has also affected the stock market, which has experienced high levels of volatility. The tech-heavy Nasdaq composite has fallen more than 2,000 points since Trump took office on Jan. 20, 2025. U.S. bond prices have also fallen, as investors face uncertainty over the economic impacts of tariffs. Instead, many investors have turned to gold as a safe-haven investment. Gold reached an all-time high of $3,500 per ounce on April 22, 2025.

Sean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He has pulled Token Ring, configured NetWare and been known to compile his own Linux kernel. He consults with industry and media organizations on technology issues.