Trump’s tariffs, cuts may well put tech in a chokehold, say analysts
- Reference: 1738351123
- News link: https://www.theregister.co.uk/2025/01/31/trump_policies_painting_global_tech/
- Source link:
A recent Forrester [1]report highlights two potential economic paths under the new administration. One scenario sees import tariffs driving up costs – typically for those buying the end product in America – and fueling inflation, which may prompt the Federal Reserve to raise interest rates.
The other involves spending cuts driven by Elon Musk's [2]Department of Government Efficiency , which aims to reduce oversight and deregulate industries; Forrester suggests this could slow economic growth, potentially leading the Fed to lower interest rates, but at the cost of reduced imports - impacting major US trade partners.
[3]
Elon Musk waiting for someone to high five him for a sweet burn against the libs, at Trump's 2025 inauguration ... Click for source
Either way, the global tech industry - and the imported goods the US [4]relied on - is caught between a rock and a hard place.
With Musk's DOGE working through a [5]considerable list of potential changes, it remains to be seen whether Musk's expected government downsizing will significantly impact tech spending.
[6]
"Lower spending would slow imports and make it more difficult for exporter countries to the US, like China, Mexico, Germany, Ireland, Taiwan, Japan, South Korea, and Canada, to find growth," the report predicted. That, in turn, could lead to tariffs to reduce net trade deficits.
[7]
[8]
If those spending and imports shrink in the US, driving down sales of foreign products, Forrester predicts that China, the European Union, and Mexico will be hit the hardest. The Office of the US Trade Representative [9]lists these three as the largest suppliers of goods to the US.
"European life sciences, automotive, and chemicals are the most vulnerable industries to a new US presidency, with 69 percent of European exports to the US coming from machinery, transport equipment, chemicals, and chemical-related products," Forrester said. Mexico's largest exports to the US [10]include vehicles, machinery and electronics. China's largest export to the US, naturally, is [11]electronics .
Tariffs probably coming either way
Regardless of DOGE's plans, import tariffs are already on the horizon. The White House [12]said on Friday that the 25 percent tariffs on Mexico and Canada may go into effect this weekend, while goods from China may face a 10 percent levy. Canada, which largely [13]exports mineral fuels and oils, vehicles, and machinery to the US, may see a bit of reprieve, as Trump is considering whether to exempt oil from the US' northern and southern neighbors from the import taxes.
Poetically, these taxes on Mexican and Canadian imports would [14]blow up the free trade agreement Donald Trump himself negotiated with the pair in his previous term.
[15]
Additionally, Trump has threatened China, and anyone else producing semiconductors outside the US, with import tariffs [16]as high as 100 percent to drive manufacturing back to America. Taiwan's TSMC, the largest chipmaker in the world, produces 92 percent of the leading-edge semiconductors used by the US, according to Forrester. It has been singled out by Trump for earning the business of US chip designers including AMD, Apple, and Nvidia.
"The new administration will force companies to build chips domestically through the imposition of tariffs," Forrester predicted - but with a twist: Analysts who authored the report don't expect subsidies from the CHIPS and Science Act that incentivized the production of stateside semiconductor manufacturing to remain at current levels.
"The financial subsidies of the CHIPS and Science Act to encourage domestic chip production will likely be reduced or abandoned," the report stated.
[17]
The future of those funds was [18]in doubt shortly after Trump won the presidential election in November.
US chip fabs haven't been going up smoothly, even with the funds from the CHIPS Act slowly trickling out. TSMC's and [19]Intel's fab projects in Arizona have been [20]hampered by high material and labor costs. Intel's planned plant in Ohio has been [21]postponed until 2026 , and that was before the chipmaker had a [22]dreadful 2024 .
[23]You probably have more CIO experience than the incoming White House CIO
[24]Now Trump's import tariffs could raise the cost of a laptop for Americans by 68%
[25]Fine print in Intel's CHIPS Act deal includes requirement to keep control of its foundries
[26]Europe, UK weigh up how to respond to Trump's proposed tariffs. One WTF or two?
TSMC, meanwhile, is still trying to get the first of its US fabs off the ground [27]this year , but its other fabs in the complex [28]likely won't come online for a few more years.
"Potential tariff trade wars between countries place uncertainty on final outcomes: The Semiconductor Industry Association and the Chamber of Progress believe that tariff wars between China and the US may harm US chipmakers," Forrester said. "Changes to chip supply to the US will take time to implement."
Green transition rollback will affect tech, too
Trump [29]moved quickly to scrap Biden-era orders promoting electric vehicles, EV infrastructure, alternative energy and other elements of the so-called Green New Deal.
The elimination of things like permits for wind energy projects and promotion of domestic fossil fuel production will slow the adoption of clean energy, EVs, solar panels and batteries, Forrester said. It will have an impact on tech professionals, too.
"The jobs most at risk from a slowdown of the green economy are in installation, maintenance, and repair; computer and mathematical occupations," Forrester noted. "Industries in professional, scientific, and technical services, as well as construction … are also more likely to be impacted."
It's hard to see an upside to any of this. If DOGE's spending cuts slow economic growth, the Fed may lower interest rates, potentially reducing imports and prompting new import tariffs, Forrester said. Meanwhile, Trump's planned import taxes could drive up costs and inflation, which might push the Fed to raise rates, strengthening the dollar but increasing borrowing costs.
We've reached out to Forrester to learn more about the impacts from its predictions, and whether there's a sunny side to all of this, and we'll let you know if they have more to share. ®
Get our [30]Tech Resources
[1] https://www.forrester.com/report/the-potential-impact-of-a-new-us-administration-and-policy-on-tech-spend/RES181996
[2] https://www.theregister.com/2025/01/21/doge_us_digital_service_renamed/
[3] https://www.youtube.com/watch?v=-VfYjPzj1Xw
[4] https://ustr.gov/countries-regions#:~:text=The%20United%20States%20is%20the%20largest%20goods%20importer%20in%20the%20world
[5] https://www.businessinsider.com/doge-cuts-changes-elon-musk-vivek-ramaswamy-2024-12
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Z51WDXKFsntpXb-3spyThgAAAMY&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Z51WDXKFsntpXb-3spyThgAAAMY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Z51WDXKFsntpXb-3spyThgAAAMY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[9] https://ustr.gov/countries-regions#:~:text=U.S.%20goods%20imports%20from%20the,percent%20of%20total%20goods%20imports.
[10] https://tradingeconomics.com/mexico/exports/united-states
[11] https://tradingeconomics.com/china/exports/united-states
[12] https://www.nbcnews.com/politics/donald-trump/live-blog/trump-administration-tariff-canada-mexico-dei-plane-crash-live-updates-rcna190078
[13] https://tradingeconomics.com/canada/exports/united-states
[14] https://www.pbs.org/newshour/politics/trump-tariffs-on-canada-and-mexico-could-hit-close-to-home-from-avocados-to-autos
[15] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Z51WDXKFsntpXb-3spyThgAAAMY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[16] https://www.theregister.com/2025/01/28/trump_tariffs_semiconductors/
[17] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Z51WDXKFsntpXb-3spyThgAAAMY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[18] https://www.theregister.com/2024/11/11/asia_in_brief_nov_11/
[19] https://www.theregister.com/2024/04/16/intel_foundry_vision/
[20] https://www.theregister.com/2024/03/19/intel_and_tsmc_building_costs_up/
[21] https://www.theregister.com/2024/02/02/intel_pushes_back_ohio_fab/
[22] https://www.theregister.com/2025/01/31/intel_q4_2024/
[23] https://www.theregister.com/2025/01/28/the_us_governments_new_cio/
[24] https://www.theregister.com/2025/01/07/trumps_tariff_electronics_prices/
[25] https://www.theregister.com/2024/11/29/intel_chips_act_grant_foundry_conditions/
[26] https://www.theregister.com/2025/01/24/eu_uk_trump_tariffs/
[27] https://www.azcentral.com/story/money/business/2024/10/17/tsmc-will-start-making-chips-in-phoenix-in-early-next-year-in-a-sign-of-progressthe-chips-that-power/75714550007/
[28] https://www.theregister.com/2024/11/29/tsmc_2nm_mass_production/
[29] https://www.theregister.com/2025/01/21/trump_eliminates_biden_ai_order/
[30] https://whitepapers.theregister.com/
Shaking
If you mean Canada, yes - with rage. This is an unnecessary, petty betrayal of an ally. I suspect Mexico feels the same way.
C.
Re: Shaking
The free ride is over.
Free ride
Counter-argument to that: 1. Trump was the one who brokered the status quo with Canada and Mexico in his first term.
2. It's not that astonishing that a resource-rich country with a population of California sells into the US more than it buys from the US.
C.
Re: Shaking
Another example of why arrogance and ignorance are not a good combination.
Re: Shaking
Free trade is not over.
From a consumer point of view, we will just trade more with not-the-USA, if tariffs are reciprocated.
All Trump is doing is isolating the USA.
Re: Shaking
For you as you, assuming American, will be the one that pays the tariff. No matter how much you believe in what comes out of the orange idiots old gob, YOU will pay the tariff.
So the bullshit "I'll lower prices really quickly" isn't going to happen. It will put all prices up. The idiot bankrupted two casino.
Re: Shaking
Tell me no nothing about economics, without telling me you know nothing about economics.
Re: Shaking
The free ride is over
Yep. It is going to cost a lot more to build a house now, with lumber prices going up 25%. Oh, you didn't realize that the US imports almost all its lumber from Canada?
You think that's going to lead to a bunch of American lumber being produced? Sorry but that's unlikely. It takes a while to grow trees, and even if Trump decides to let them log old growth forests the US owns that's not the kind of lumber anyone is going to use to build houses (except for stuff like flooring where quality lumber matters) Even if they could, they'll just pass on the costs to consumers and know the orange moron will last only four years at most. If he's still around at this time in 2029 then he's become a dictator and lumber costs will be the least of anyone's problems. The biggest problem will be the brain drain of a lot of us educated people fleeing the US, and letting the anti-science choosing winners by who kisses Trump's ass rather than merit formerly great US fall into ruin while we look at it and laugh from across an ocean.
That's the point
They want an economic collapse. They are going to bankrupt everyone and everything except themselves.
Get yo money OUT. Pull it out of the banks. Stop using their products. Stop investing in their scams.
They intend to collapse everything. That's the point. Get out.
Re: That's the point
Get yo money OUT. Pull it out of the banks. Stop using their products. Stop investing in their scams.
Yep. Especially out of Forrester. This part amused me-
"The jobs most at risk from a slowdown of the green economy are in installation, maintenance, and repair; computer and mathematical occupations,"
Lots of repair work needed because 'green economy' garbage is so vulnerable to weather effects. Computer & mathematical occupations? Seriously? Other than producing countless reports trying to justify the 'green economy', it still runs into the same reality problems, like dealing with the vagueries of the weather. We knew this when we abandoned the 'Age of Sail', and even Bezos's yacht has diesel engines. Putting the money into nuclear would create far more, and more productive jobs. Neo-luddites could still spread FUD, but they'd have to use their own money to fund their lobbying.
But I think the more interesting announcement was the threats, bluster and possibly bluffs around BRICS, and potential 100% tariffs on any nation that tried to use their own currency for trade. The use & abuse of sanctions have already provided every incentive not to rely on US dominated systems, and this will almost certainly accelerate. Might cause some pain in the short term, but if the US (and EU) keep thinking that they can dictate terms, they're probably in for a rude awakening.
Re: That's the point
The banks is a good point. The Trump deregulation of financial services means that the US financial sector is accelerating towards a brick wall called Financial Crisis. It will probably look slightly different from the GFC of 2008 (and may be mostly domestic in the US instead of global because elsewhere the guardrails aren't removed) because each crisis always looks different from the last because many (but not all) people have learned from the previous financial crisis.
We have seen a US mini banking crisis with the collapse of Silicon Valley Bank, Silvergate Bank and Signature Bank in quick succession in 2023. Perhaps it will be more of those.
Or perhaps it will be chickens coming home to roost with regards to the insanely high debt levels of many US corporates and it will be big companies suddenly being squeezed to death by banks.
Or perhaps it's mortgages, again.
Or, the insurance sector struggling to insure climate disasters (insuring a house in Florida was already neigh on impossible due to climate change, I expect living in wooded areas like those on the West Coast that keep burning will no longer be insured.) and retracting from parts of the market before it topples them.
Or it's power companies squeezed till breaking point between banks and insurers.They are in the firing line because they have ageing and creaking infrastructure, have been blamed for causing some of the forest fires, and do not have the capital to lift their infrastructure into the 21th century. They are in a tight spot.
It's probably going to be at least one or two of the above within the next 24 months.
Re: That's the point
All you have to do is look at his history. He has bankrupted and burned to ashes everything he has ever touched, then writes off the losses so the tax payers have to cover him. For some ridiculous reason banks have continued to give him loans (I have my guesses - evil).
What happens when you bankrupt a country and the tax payers can't cover it?
We are about to find out.
You better stop ...
... or I'll punch myself in the dick *again*!
--Florida Man
Re: You better stop ...
I ain't heard chit from Putin. That dude is laughing his ass off in a nuke bunker watching frumpys videos over and over on one screen, and cnn-fox-nbc on the other.
Re: You better stop ...
As a Floridian attempting to di di mau out of this bit of un-"liberated" South Vietnam I resent the implication I haven't already punched myself in the dick again already!
Well if Trump is reneging on the trade deal then I'm sure that opens up a lot of possible actions for Canada and/or Mexico that do not involve damaging their own economies by imposing tariffs in return.
It does open several actions, but in general, they can all fall under the category of trade war. Tariffs are just one category of that, and you can use regulations of various types as proxy tariffs as many countries do. They can use other diplomatic levers, and Mexico probably has more of them than Canada does because they run a lot of things intended to reduce immigration to the US and that is also something the current administration cares a lot about. Even if their first move is not tariffs*, you can pretty much guarantee that the response from the US will be more tariffs. Not only are these considered by Trump to be good in their own right, they are considered punishments and the new diplomacy from the US seems to be based on doling out lots of punishments. Having no trade war would be better for all three of them, but the current US administration really likes tariffs, so a trade war is what you're going to get.
* The first move, however, will be tariffs after all. Canada and Mexico have both said this. They may be hoping that these will work as well as they did the last time. However, last time, they worked because those tariffs negatively affected politicians who supported Trump and were able to convince him to back down on some of his actions. Time will tell if that pipeline still exists and works as before.
Europe-US trade imbalance
When it comes to tech I'd say tech services is going to be the most interesting to watch. Europe sells far more goods (not just tech, also food, clothing, cars, aeroplanes, helicopters etc. etc.) to the US than vice versa. The US sells far more tech services to Europe than vice versa.
That means that if the US throws up trade barriers for European goods then a potential retaliation could be barriers for US tech services. For quite a lot of US tech companies Europe is their largest or second largest market. That could hurt.
They're literally shaking right now. Lol