How Trump’s Tariffs Could Hit The Tech Industry

President Donald Trump this week unveiled sweeping new tariffs on dozens of countries, including big US trade partners such as the European Union, China, and India. This dramatic maneuver is already shaking up the global economy and could have major ramifications for the tech industry.

Here is a look at how the levies could impact the sector and digital policy:

Market and tech stocks tank

The tariffs had the most immediate impact on Wall Street. Markets plummeted on Thursday after Trump’s tariffs officially took effect, with major tech companies tumbling.

According to the Associated Press, the S&P 500 saw its worst day since the economy crashed at the beginning of the COVID-19 pandemic in 2020. The Dow Jones Industrial Average dropped by over 1,600 points, or four percent, and the Nasdaq fell by six percent.

Amazon, Nvidia, and Meta saw their stocks drop by seven percent or more, as did Apple, which lost over $300 billion in market value, the Financial Times reported. A slew of semiconductor and personal computer markets like Micron, HP, and Dell saw double-digit losses, CNBC reported.

The specter of retaliatory tariffs

Trade analysts and business leaders have long warned that US tariffs would likely prompt retaliatory measures from other global powers, and the US tech sector quickly emerged as a likely target.

On the eve of Trump’s announcement of the tariffs, European Commission President Ursula von der Leyen said Europe “holds a lot of cards” it could use to retaliate, including targeting digital services.

Similarly, a spokesperson for the French government said Thursday that the nation is “ready for this trade war” and is looking at US “digital services” as part of its response, according to Euractiv. The spokesperson specifically called out tech’s big five: Meta, Alphabet, Apple, Microsoft and Amazon. Germany’s economy minister suggested they may support the plan as well.

The remarks could put Silicon Valley squarely at the center of the global trade dispute.

A massive disruption to global supply chains

The tariffs are poised to dramatically reshape global supply chains for tech companies that have come to rely on free trade with many of the targeted US partners for their products.

Apple, for one, makes a majority of its iPhone products in China, which has been heavily hit by Trump’s tariffs. Some analysts said the tariffs could lead iPhone prices to spike by 40 percent.

E-commerce giant Amazon, meanwhile, relies on products sold by third-party vendors in China.

The White House released a fact-check Thursday clarifying that semiconductors would not be subject to reciprocal tariffs, including Trump’s 32 percent levies on Taiwan, a major chip hub. But the country remains wary of future punitive measures, the New York Times reported, and analysts said Trump’s baseline 10-percent tariffs for most countries could still hit the chips industry.

The tariffs could also put a damper on OpenAI, Oracle and Softbank's ambitious plans to develop major new data centers to power artificial intelligence tools, Reuters reported.

A bargaining chip against foreign tech rules?

While the tariffs wreaking havoc on tech stocks, some industry leaders told Politico they hoped the Trump administration could use them as a bargaining tool to defang foreign rules targeting their companies, including the European Union’s sweeping regulations.

In a report released by the US Trade Representative this week, the Trump administration called out numerous global tech regulations as “digital trade barriers,” including Australia’s measure forcing tech giants to bargain with publishers and Canada’s digital services tax. The position was hailed by industry leaders, and could shed light on how the US may approach tariff talks.

Government leaders in the United Kingdom have already suggested they may change their plans to level a digital tax in response to the tariffs, so the gambit may pay off.

The TikTok factor?

Trump suggested last week that he may reduce tariffs against China — unveiled this week at a whopping 34 percent — if the country signs off on a sale of TikTok’s US operation.

The remarks came ahead of the latest April 5 deadline for the app’s Chinese parent company, ByteDance, to sell the platform or face a ban in the US. The Trump administration has said it is trying to hammer out a deal prior to then. Trump has said the app could net the US up to half a trillion in value, even suggesting it could be partially owned by a US sovereign wealth fund.