Trump Tariffs: Will the Data Centre Industry be Impacted?
The world trade markets have been rocked by President Trump’s announcement that the US would be imposing strict tariffs at a minimum of 10% on key markets like Europe, the People’s Republic of China, India, Vietnam and South Korea.
Branded as ‘Liberation Day’, President Trump's administration enforces a 10% baseline tariff on US imports, with the EU and China facing higher rates. Other nations are facing rates as high as 50%, with the rating system based on the country’s existing trade barriers with the US.
Making his speech from the White House’s Rose Garden, Trump said 2 April 2025 is “one of the most important days in American history,” adding that “our country and its taxpayers have been ripped off for more than 50 years, but it is not going to happen any more.
“It’s our declaration of economic independence. For years, hard-working American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense, but now it’s our turn to prosper.
“This will be, indeed, the golden age of America. It’s coming back and we’re going to come back very strongly.”
The data centre impact
The tariffs threaten to disrupt global supply chains for multinational corporations, particularly within technology sectors.
Notably, tariffs on steel and aluminum have been imposed at 25% and 10% respectively, which will likely impact data centre construction and innovation moving forward.
The data centre industry has recently been riding the highs of a construction boom, but now faces challenges if it is to continue relying on steel – an essential component of data centre buildouts. Developers may have to face alternative materials and designs to avoid such tariffs and supply chain disruption, whilst also prioritising sustainability.
US tariffs could ultimately drive costs up for essential materials like steel, lumber and HVAC systems – causing havoc on project timelines and budgets.
Data centres may also have to reckon with rising material and labour costs as they seek to create new development opportunities across the industry.
Continuing the global chip war
More broadly, the tariffs have put a strain on technology firms – which is particularly the case for China, which accounts for a significant amount of global technology manufacturing. It is currently estimated that the country produces roughly 30-35% of the world’s total manufacturing output.
- According to data published by the United Nations Statistics Division, China accounted for 31% of global manufacturing output in 2022
Taiwan has also been critically impacted by Trump’s tariffs. The country says the 32% tariffs that have been imposed are unreasonable.
The country is a global chip leader in manufacturing and produces a significant portion of the world's most advanced semiconductors – including those used in AI and quantum computing. Tariffs like this could have a significant impact on semiconductor leaders like Nvidia, AMD and Qualcomm and Taiwan Semiconductor Manufacturing Company (TSMC).
However, The White House has published a fact sheet following Trump’s announcement that outlines that semiconductors will be exempt from the reciprocal tariff.
Trump shared: “To any company that objects to our common sense, reciprocal tariffs… My answer is very simple.
“If they complain, if you want your tariff rate to be zero, then you build your product right here in America.”
- Nvidia stock dropped 4.7%, while AMD fell to a similar level at 4.5%
- Broadcom dipped even further at 5.2% and Micron further still at 6.4%
- Apple’s stocks have slipped more than 6%
Next steps for the technology sector
Some nations could benefit from the tariffs. For instance, India’s 26% tariff is lower than other neighbouring countries, which could result in technology companies turning towards them to meet demand.
Wedbush analyst Daniel Ives explains the tariffs are “worse than the worst case scenario” for tech investors.
He adds that the technology industry “will clearly be under major pressure on this announcement [over] worries about demand destruction, supply chains and especially the China and Taiwan piece of the tariffs.”
In anticipation of tariffs disrupting operations and potentially pricing goods out of the market, many chip manufacturers are moving their manufacturing sites out of China in favour of the US.
“We must be able to build the chips and semiconductors that we need right here. It's a matter of national security for us.”
TSMC plans to invest an additional US$100bn in the US, expanding its chip manufacturing footprint to bolster domestic production and reduce reliance on foreign supply chains.
Its CEO C.C. Wei announced this move in March at the White House, with the company saying it was looking “forward to discussing [its] shared vision for innovation and growth in the semiconductor industry, as well as exploring ways to bolster the technology sector along with [its] customers”.
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