Tech World Braces for Trump Tariff ImpactTech World Braces for Trump Tariff Impact

President Donald Trump was set to enforce major tariffs on trade partners Tuesday and signaled tariffs for the EU and more -- a move that sent stocks crashing on Monday over uncertainty and what a broad trade war will mean for consumers and businesses. But calls with North American trading partners resulted in a 30-day reprieve.

Canada and Mexico may pay 25% duties on exports to the US, and China will face a 10% levy. Canada and Mexico had announced plans to retaliate, with the former promising its own tariff of 25% on $155 billion of US-imports. Tariffs, taxes paid by importers of foreign goods, will likely be offset by increased prices impacting everything imported -- from fruits and vegetables to semiconductors, computer hardware, and more.

On Monday, the Trump administration announced the tariffs on Mexico and Canada would be delayed by one month. Trump held separate calls with Canada's Prime Minister Justin Trudeau and President Claudia Sheinbaum with each promising enhanced border controls. On Tuesday, China struck back with tariffs on US coal, crude oil, and farm equipment and automobiles.

Impact on Technology

A January report from the Consumer Technology Association said tariffs on technology products could slice US consumer purchasing power by up to $143 billion. The report also said sales of laptops and tablets could decline up to 68%. Smartphone buying could decline by 37%.

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According to the Office of the United States Trade Representative, China (with $536.3 billion in goods), Mexico ($454 billion) and Canada ($436.6 billion) were the among the top origin countries for US imports in 2022. Electronics and machinery were among the top imports at $916 billion. China and Mexico are among the top suppliers for US-bound electronics. In 2022, the US spent $108 billion on computers for personal and professional use.

“Retaliation from our trading partners raises costs, disrupts supply chains, and hurts the competitive of US Industries,” CTA Vice President of Trade Ed Brzytwa said in a statement.

Many economists -- on both the right and left side of the political spectrum -- warn that even a temporary tariff policy will have lasting impacts on the economy.

“Trump’s tariffs will create an immediate economic shock, especially for North American trade, which has not faced barriers like this in decades,” Erica York, vice president of federal tax policy for non-profit think tank Tax Foundation, tells InformationWeek in an email interview. “Even if the tariffs are not left in place permanently, they will have a lasting negative effect on the US economy by heightening policy uncertainty. If left in place permanently, they will shrink US economic output, harm productivity, and reduce American incomes.”

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York says Tax Foundation’s research suggest that US taxpayers’ after-tax incomes will drop by 1.1% in 2025. (Media Bias/ Fact Check gives Tax Foundation a “high” credibility score with a right-center political bias rating).

What Will Tariffs, New Policies Mean for IT?

Forrester analyst Michael O’Grady says software and IT services are somewhat insulated from tariff pressures, citing findings from the research firm’s 2025 Global Tech Forecast. “From a tech viewpoint, it is helpful to realize that three-quarters of enterprise and government tech spend in the US comes from software and IT services, computer, and communication equipment make up about 13% of US tech spend … although tariffs will impact the price of imported goods, most of the software and IT services spend would not come from China.”

However, IT firms will contend with likely price increases for hardware, including computers, networking equipment, and semiconductors.

“We are on edge,” says Mike Turicchi, vice president of marketing and strategic relations for Virginia-based IT services provider NCS Technologies. He says major vendors have already signaled substantial price increases for hardware. “For us, it’s been a wait-and-see game. There’s been a lot of big talk and also a loft of shifting resulting in confusion bordering on chaos.”

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But there may be opportunities born out of new policies as well, Turicchi says.

“New agencies like the External Revenue Service [which Donald Trump recently floated as an alternative to the Internal Revenue Service] and DOGE [the Department of Government Efficiency headed up by billionaire Elon Musk] will likely create new demand for our products and services,” Turicchi says.