Big Tech does a delicate dance as Trump tariffs loom
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Big Tech is doing a delicate dance as it attempts to sidestep the harshest aspects of President Trump's trade war.
Why it matters: The U.S. tech sector is heavily reliant on cheap imports of smartphones, other consumer electronics and AI chips.
Driving the news: Nvidia Monday committed to invest up to $500 billion in U.S. AI infrastructure, including two new factories to build supercomputers, via several partnerships.
- This follows Apple's announcement less than two months ago that it would invest $500 billion of its own in the U.S.
The big picture: Though analysts debate whether recent moves were already in the pipeline, the announcements could help the companies avoid the worst impacts from Trump's tariffs.
Case in point: Trump claimed credit for today's Nvidia investment.
- "The reason they did it was because of the election on Nov. 5 and because of a thing called tariffs," he told reporters today.
- He did the same back in February following Apple's announcement. And this weekend Apple appeared to secure an exemption for smartphones and laptops from Trump's 125% tariffs on Chinese products. (The administration clarified that the relief was temporary, though analysts say the reprieve will probably culminate in lower duties.)
Between the lines: Effort seems to matter. Monday, from the Oval Office, Trump signaled to reporters that he was considering a break in tariffs for auto companies that were committing to supply chain changes. "They need a little bit of time because they're going to make [parts] here, but they need a little bit of time. So I'm talking about things like that."
State of play
The U.S. gets about 81% of its smartphones and 66% of its laptops from China, according to S&P Global Market Intelligence.
- But it doesn't get any chips from China. Those come largely from Taiwan.
- The 20 product types that are temporarily exempt from the reciprocal tariffs account for about 23% of total U.S. imports from China, 64% of goods from Taiwan, 44% of those from Malaysia and 30% of shipments from Vietnam and Thailand, according to Capital Economics.
What we're watching: What will the new tariff rate be for electronics and chips once the dust settles?
- "Overall, we expect the 1-2 month comment period to provide room for negotiations that can hopefully reduce the tariff burden," Bank of America analyst Vivek Arya says.
Reality check: The Trump administration hasn't fully acquiesced to the tech sector, as evidenced by today's launch of an antitrust trial that could force Meta to sell Instagram.
- Unless Trump tells the FTC to shut the whole trial down, Mark Zuckerberg's recent overtures to the White House may not do the company any good here, Axios Pro's Ashley Gold writes.
The bottom line: The trade picture is improving for the tech world.
