US President Donald Trump’s sweeping reciprocal tariffs could significantly impact Big Tech’s plans to build artificial intelligence infrastructure in the country. The tariffs, which include a 34% duty on China and 32% on Taiwan, could disrupt data-center equipment supply chains and force tech giants to reallocate spending.
Analysts say that companies such as Oracle, SoftBank, and others have touted lofty plans to invest heavily in AI since Trump’s return to the White House. However, with electronics imports worth nearly $486 billion last year, tariffs could increase costs significantly for data center equipment, potentially delaying expansion and adoption of AI technology.
The tariffs are also a new threat to top cloud service providers such as Microsoft, Alphabet, and Amazon, which already face skepticism from investors over their steep AI budgets. Brokerage HSBC has warned of a potential slowdown in spending at cloud companies next year, citing the impact of tariffs on demand destruction.
Industry analysts predict that data center building costs will rise, although the extent of the impact is not yet clear. Microsoft has already started to articulate a more cautious approach to its data center build-out, while Amazon and Alphabet are also scaling back their plans due to the uncertainty surrounding the tariffs.
The Trump administration’s exemption of semiconductors from the tariffs may provide some relief, but circuit board assemblies sold with these components could still be affected. As such, costs for AI hardware may not increase significantly, potentially mitigating the impact on data center expansion and adoption.
Source: https://www.reuters.com/technology/trump-tariffs-could-stymie-big-techs-us-data-center-spending-spree-2025-04-03