Trump’s Tariffs Threaten Big Tech’s AI Infrastructure Growth
US President Donald Trump’s new tariffs risk jeopardizing the multi-billion-dollar investments by major tech firms in building AI infrastructure, analysts warned. Since returning to the White House, Trump has been a vocal proponent of AI development, backing initiatives from tech giants like Oracle, SoftBank, and others, as reported by Reuters. However, his latest tariff plan could slow momentum.
Recently, the President imposed heavy tariffs, including 34% on Chinese imports, 32% on goods from Taiwan, and 25% on South Korean products. A blanket 10% tariff will apply to all imports. Given that electronics, such as smartphones, PCs, and data center equipment, accounted for nearly $486 billion of US imports last year, the ripple effects could be severe.
Bernstein analysts estimate that US imports of data processing equipment will total around $200 billion in 2024, sourced mainly from Mexico, Taiwan, China, and Vietnam.
Tech Giants Reconsider Spending Strategies
Abhishek Singh, partner at research firm Everest Group, said, “Capital expenditure by tech giants will get reshuffled: Expect major players in AI infrastructure and consumer tech to reallocate short-term spending away from expansion and toward procurement hedging or sourcing shifts.”
According to Reuters, although semiconductors were spared in this round of tariffs; a White House official indicated that targeted tariffs on chips could follow later. AMD acknowledged it is evaluating potential impacts, while Intel, Nvidia, and TSMC declined to comment.
Following the announcement, shares of Nvidia, AMD, and Broadcom slid by 7–10%, while TSMC’s U.S.-listed stock fell 7.6%. Intel, meanwhile, rose 2.1% after news emerged of a preliminary joint venture with TSMC.
Data Center Costs and AI Ambitions in Question
Reuters reports that higher equipment costs may delay data center construction and slow AI adoption. Dylan Patel of SemiAnalysis noted that the impact depends on tariff classifications, with circuit board assemblies from Taiwan potentially still affected unless broad exemptions apply.
These tariffs cast a shadow over ambitious ventures such as Stargate, the $500 billion AI data center project led by OpenAI, SoftBank, and Oracle, which aims to construct 20 AI data centers across the US Announced by Trump earlier this year, Stargate seeks to position America at the forefront of AI innovation.
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Cloud Providers Face Additional Pressure
The new tariff policy is impacting cloud giants Microsoft, Alphabet, and Amazon, already under pressure from rising AI costs. Microsoft’s shares dropped 2.4%, while Amazon and Alphabet fell 9% and 4%. Microsoft paused 2 gigawatts of data center projects due to oversupply, and HSBC forecast slower cloud spending next year, lowering Nvidia's price target.
