The introduction of new reciprocal tariffs by Donald Trump has sent shockwaves through the technology sector, with major companies like Meta, Google, and other IT giants facing potentially significant impacts. The tariffs, aimed at reshaping international trade, introduce increased costs on imported components and equipment vital to these companies’ operations. This shift could alter their supply chain strategies and financial outlooks.
Specifically, the building and maintenance of data centers, crucial for services provided by Meta, Google, and others, are threatened with increased expenditures. Many of the components required for these facilities are manufactured overseas, making them subject to the new tariff regulations. As reported by The Straits Times, analysts predict a potential slowdown in Big Tech’s US data center spending spree due to these rising costs. This situation may hamper efforts to expand AI infrastructure within the United States.
Furthermore, these tariffs will also impact the overall economic health, and that, in turn, has a direct impact on the advertising revenues of companies such as Meta and Google. As reported by the Motley Fool, with the tariffs applied, economists expect a slowdown in spending, which relates to a decrease in advertising revenue. This presents a ‘double whammy’ for the alphabet, as explained by the strait times, having both higher construction cost for data centers, and lowered advertising revenue.
In addition to increased hardware costs, general economic instability due to tariffs also causes market-wide stock selloffs, as was seen after these tariffs were introduced. As seen in reporting from the Times of India, there were large drops in market capitalization within tech companies. This overall market instability can heavily impact the ability for these large companies to continue investing in the capital needed for growth.
