Tariff uncertainty looms large over budget conscious CIOs
- Reference: 1737468013
- News link: https://www.theregister.co.uk/2025/01/21/cio_value_budget_tariffs/
- Source link:
Both the CIO and the largest vendors will be watching keenly to see how populist rhetoric is manifested in US policy, says Gartner. Recent estimates from Consumer Technology Association suggest the price of laptops could rise between [1]45 percent and 68 percent if tariff policies are enacted.
This is what the American public voted for. This is how Trump intends to govern, so we're not in an abnormal state
While the prospect of tariffs on imports from China and other countries in the far east could affect hardware prices across a range of categories, a similar move against the EU and other European countries could affect software and services. US retail giant Walmart, for example, relies heavily on SAP for its ERP systems.
Speaking to The Register , John-David Lovelock, distinguished VP analyst at Gartner, said: "There is going to be a very dynamic market. The things that are happening right now with forecasting or promoting the idea of tariffs but being vague on what they are, being vague on the rates, letting the market get into this frantic state of concern. This is a feature, not a bug. This is what the American public voted for. This is how Trump intends to govern, so we're not in an abnormal state."
However, Gartner is optimistic on IT spending during 2025. It forecast an overall increase of 9.8 percent in worldwide IT spending in 2025, to reach $5.61 trillion. The highest rate of growth remains in datacenter spending, at 23.2 percent to $405 billion.
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Lovelock predicted uncertainty would remain throughout the year. "At a certain point, it won't matter because budgets are budgets, and budgets have been set, and CIOs will spend their budget. What becomes the open question is how much value will they get? Because if I have to pay 25 percent more for my PCs, I'm still going to spend my PC budget, I'm just going to have fewer new PCs.
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"So, in one sense, it doesn't matter if the forecast is the forecast because it's based on budgets, expectations and market mechanics. On the other hand, it matters very much to who's going to be able to make that money and how much value CIOs will be able to extract for their dollars," he said.
Ultimately, US cloud and social media platform giants rely on the hardware that powers their datacenters, but their leaders were reluctant to come forward and offer their assessment at the prospect of Trump tariffs following his November election victory.
[5]Now Trump's import tariffs could raise the cost of a laptop for Americans by 68%
[6]Here's how a Trump presidency could change the tech industry
[7]Tech titans hide in shadows awaiting Trump tariff threats
[8]Trump tariffs transform into bigger threats for Mexico, Canada than China
While the objective of the tariffs may be to bolster US manufacturing, that cannot happen overnight. It takes years to build a chip fab, even if there are the engineering skills to do so, which [9]Register writers discussed late last year .
"It's noise versus signal. The signal is the economy [and it] is doing well: it's not helping; it's not hindering. Companies are turning to revenue growth, recognizing that they have to build it themselves. The tariffs are the noise that they have to deal with while they're executing this strategy, and it does mean that they are going to be a little bit more timid until there's more certainty, and they will be more bold once they have some. It will be much more of a start and stop level of spending this year rather than [a] smooth one," Lovelock said. ®
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[1] https://www.theregister.com/2025/01/07/trumps_tariff_electronics_prices/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Z4_Su1PLBgOPLAjC-o6bjQAAAFU&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Z4_Su1PLBgOPLAjC-o6bjQAAAFU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Z4_Su1PLBgOPLAjC-o6bjQAAAFU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2025/01/07/trumps_tariff_electronics_prices/
[6] https://www.theregister.com/2024/11/13/president_trump_tech/
[7] https://www.theregister.com/2025/01/03/tech_titans_hide_in_shadows/
[8] https://www.theregister.com/2024/11/26/trump_tariffs_mexico_canada/
[9] https://www.theregister.com/2024/11/13/president_trump_tech/
[10] https://whitepapers.theregister.com/
The place where I work has an American distributor coming to visit tomorrow. Oh, to be a fly on the wall...
(beer, 'cos everyone 's gonna need one for getting the next 4(?) years)
In some ways it doesn't matter.
Tariffs (basically an extra sales tax) damage whoever levies them the most in broad economic terms, so this is largely an American problem of their own making. Companies using tech will just put the handbrake on spending and slow the churn rate. Businesses will replace PCs and laptops less regularly, so fewer sales to Dell, Lenovo, Sony etc, and they will take a hit. It doesn't really matter for users as most systems are wildly overspecced for what they are used for. It may actually help people to put off upgrading to AI PCs with Recall, reducing the chances of collateral damage from the stuff in those that they do not want.
Its a big planet. This is one country repeating Brexit on a larger scale, with even more economic self harm. Americans have always had stuff cheap, and now they won't. As long as you aren't ridiculously dependent on the US for your sales, you will be OK. Anyone who has an effective lock on their customers will also be OK. Carry on as normal. They will have to pay the extra USG tariff-tax.
Even for stuff like high end Scotch booze, it won't be that bad. Rich people don't notice taxes, and selling addictives has never been that hard.
Brexit damaged the UK the most, this will damage the US the most. That's how nationalist economics works. Outside the US, just shrug and get on with life.
It looks like 1st Feb 2025 for 25% Tariffs
on Mexico and Canada.
The Doofus (Trump) was also talking about 100% tariffs on Spain. The Idiot in Chief seemed to think that Spain was the 'S' in BRICS so he was proposing 100% Tariffs on Spain. The 'S' in BRICS stands for where Elon should be sent back to, South Africa.
If he does put any tariff on Spain or Denmark then the EU will retaliate. Laws of unintended consequences will come to play.
Chin up folks... only 40 more years of this madness.