President Donald Trump has imposed tariffs that could reshape the North American tech landscape, adding $50 billion in new costs for imports from Canada and Mexico alone. The tariffs — 25% on all imports from Canada and Mexico, 10% on Chinese goods, and 25% on European Union tech components like semiconductors — are set to disrupt supply chains, increase consumer prices, and push major tech firms toward domestic production. With 80% of U.S. foundry capacity for key semiconductor sizes currently reliant on China and Taiwan, experts predict ripple effects across the entire tech sector, impacting everything from smartphones and cloud services to AI infrastructure.
Tariffs on goods compliant with the United States–Mexico–Canada Agreement — goods primarily sourced and manufactured within North America — and car parts from Canada and Mexico are delayed until April 2. All other imports from these countries have been subject to the tariffs since March 4. By March 12, all imported steel and aluminum will be hit with a 25% tariff and chips and other critical E.U. tech components will follow by April 2.
SEE: Trump’s Import Tariffs: How They’ll Shake Prices, Jobs, and Trade
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The new tariffs are expected to increase prices for manufacturers and consumers across the tech sector, affecting everything from smartphones and laptops to cloud storage and AI computing power.
The U.S. relies on China and Taiwan for approximately 80% of its foundry capacity for 20-45nm chips and about 70% for 50-180nm chips. Tech firms may attempt to shift sourcing to tariff-free countries like India and Vietnam, but many will pass the additional costs to consumers instead.
Manufacturers of consumer electronics such as laptops and smartphones may also be affected if they import different components from or assemble their products in tariffed countries. Indeed, Apple primarily manufactures its iPhones in China, so the handsets may see a price hike in the U.S.
Data centers and AI infrastructure face higher costs
The tariffs on aluminium and steel will sting data center companies, too, as these materials are essential for server racks, cooling systems, and other infrastructure, driving up construction and equipment costs.
The additional expenditure and potential supply chain disruption may be reflected in cloud storage prices from companies like AWS, Google Cloud, and Microsoft Azure, as well as SaaS and AI companies that utilise large-scale data processing. It could also delay plans to build new data centers that companies have earmarked to meet the growing demand for AI.
Nevertheless, the stated intention is to reduce dependence on foreign adversaries. While this may result in higher prices for consumers in the short term, it could also drive investment in domestic industries and boost supply chain resilience.
See also: Microsoft to Invest $80 Billion in AI Data Centers in Fiscal 2025
North America’s supply chain at risk
“(The U.S. is) a big producer, it’s a big consumer,” senior research fellow at the Mercatus Center Christine McDaniel told Bloomberg. “We have products going back and forth across the border, you know, several times before it ends in a finished product.”
McDaniel said that Mexico and Canada will pay over $50 billion in tariffs for importing tech and chips into the U.S., adding that the cost will “come out of the North American economy.” Canada mines essential raw materials like nickel and cobalt, while Mexico handles component assembly, testing, and packaging for major manufacturers such as Foxconn.
“That will all really hurt the pricing power of the U.S.,” McDaniel said. “It’ll either eat into their profit margins or they’ll pass it on to U.S. consumers.”
Gil Luria, head of technology research at D.A. Davidson, told Bloomberg that part of the reason Trump has implemented tariffs on goods from the E.U. is in retaliation for the region “making a habit” of fining major U.S. companies, such as Apple, Google, and Meta, for “whatever behavior they choose to penalize.” He added that the EU may become “combative” in response, and the level to which it does will determine the scale of the tariffs’ impact on the big tech players.
SEE: Meta to Take EU Regulation Concerns Directly to Trump, Says Global Affairs Chief
Tech companies ramp up U.S. manufacturing
Even prior to the tariffs, many companies have been announcing plans to build new facilities within the U.S., which is a trend likely to continue. This week, TSMC pledged to expand its spend on building data centres in the U.S. to $160 billion, which it deems the “largest single foreign direct investment in U.S. history.”
Last month, Apple announced it will spend $500 billion on manufacturing and research in the U.S. over the next four years. In January, the Stargate project was launched, which saw companies including SoftBank, OpenAI, and Oracle dedicate $500 billion to generative AI infrastructure in the U.S., including data centers.
In the press conference for this week’s TSMC investment, Trump added that there are still “many (more companies) that want to announce” construction projects stateside. Such companies could absorb the business of foreign competitors in the chip, cloud, and other hardware markets.
