The Trump administration’s back-and-forth moves on tariffs for technology products are stirring confusion in a sector heavily reliant on global supply chains.
Tech companies breathed a sigh of relief last Friday when the Trump administration revealed electronics would be exempt from the “reciprocal” tariffs, but by the end of the weekend, President Trump signaled many of the same products will still be subject to expected sector-based tariffs.
The dizzying tariff changes are driving uncertainty for the technology industry, which is being forced to make manufacturing and supply chain decisions based on evolving goalposts.
“It’s creating an awful lot of chaos at the moment. A lot of uncertainty,” said Rob Handfield, a professor of supply chain management at North Carolina State University.
The state of play of Trump’s trade war changed a number of times over the past month, though the past two weeks saw some of the most drastic changes when it comes to the tech sector.
Trump imposed higher tariffs on nearly all of the U.S.’s trading partners last Wednesday. Later that day, he issued a 90-day pause on the higher rates after global market shares plummeted and dropped those tariffs for most countries to a baseline rate of 10 percent
Nonetheless, many tech companies were not entirely in the clear as many rely on manufacturing sites and supply chains in China, which was not included in the pause amid a larger trade war with Trump.
The White House slapped China with a 145 percent tariff, prompting China to impose a 125 percent retaliatory tariff on U.S. goods.
But then last Friday, guidance posted by Customs and Border Protection, which collects duties on imports, revealed about 20 products would be excluded from the tariffs. Products included smartphones, computers, routers and semiconductor chips.
The move was quickly celebrated by those in the tech industry and consumers hoping to avoid paying higher prices for electronics.
That celebration was cut short two days later when Commerce Secretary Howard Lutnick clarified the exemption is only a temporary measure.
“This is not like a permanent sort of exemption. [Trump’s] just clarifying that these are not available to be negotiated away by countries. These are things that are national security, that we need to be made in America,” Lutnick told ABC News’s “This Week,” on Sunday.
Trump on Sunday said he would announce tariffs on semiconductors, which would, in turn, cover some electronics.
When asked on Monday about potential exemptions for Apple products — which are poised to take some of the largest hits from the U.S.-China trade war — Trump did not address specifics but argued the shifting tariff announcements are a sign of flexibility.
“Look, I’m a very flexible person. I don’t change my mind, but I’m flexible. And you have to be. You just can’t have a wall, and you’ll only go — no, sometimes you have to go around it, under it or above it,” Trump said.
“There’ll be maybe things coming up. I speak to Tim Cook; I helped Tim Cook recently, and that whole business. I don’t want to hurt anybody,” he added, referring to the Apple CEO.
The White House confirmed it wil open a Section 232 investigation into electronics imports, which would serve as the grounds for any tariffs on semiconductors.
A Section 232 investigation is ostensibly for the Commerce Department to determine the impact of imports on national security.
The White House defended Trump’s approach to tariffs on Monday.
“By implementing a historic 125 percent reciprocal tariff on China while pursuing a Section 232 investigation on electronics imports, President Trump is taking a nuanced, strategic approach to combat China’s unfair trade practices and reshore the high-tech manufacturing that is critical to our national and economic security,” White House spokesman Kush Desai told The Hill.
“This approach will build on the hundreds of billions of dollars’ worth of electronics and semiconductor investment commitments that the administration has secured without letting China exploit loopholes to keep undermining American industries and workers,” Desai added.
The fluctuating messages are putting various technology companies in a tight spot as they weigh adjusting their protocol based on circumstances that could change at any moment.
“Companies cherish stability, predictability, certainty in the business environment and that applies not just to trade policy, but institutionally, programmatically, regulatorily, etc.,” Stephen Ezell, vice president for global innovation policy at the Information Technology and Innovation Foundation (ITIF) told The Hill.
While most companies are keeping any backup plans to themselves, some have already made public adjustments.
Nintendo, which moved some but not all its production out of China, announced earlier this month it would delay preorders for its new Switch 2 game as it assesses the “potential impact of tariffs and evolving market conditions.
Elon Musk’s electric vehicle manufacturing company Tesla also paused sales of some of its models in China when the retaliatory tariffs hit, though it did not confirm the trade issues were the main reason.
Ezell predicted most companies will take an extra cautious approach “until there is more clarity on the final contours of the tariffs and trade relationship.”
Handfield, who is the executive director of the Supply Chain Resource Cooperative, said some companies are scenario planning or stress testing supply chains to determine what will happen in the case of certain tariff amounts.
“What if tariffs go to X? What is they go to Y? What if we move this facility over here?” Handfield explained. “So they’re starting to look at the potential impacts, they’re not going to make any major decisions until things stabilize a little bit.”
This stabilization would likely be met once trade negotiations with other nations take place and the outcome is made public, experts said.
“Are you going to make an investment until you know what the outcome of the negotiation is? Probably not,” Ezell said. “The more this is unclear, the more this is open, that this is prone to change, it will have a dampening effect on investment.”
“That said, AI (artificial intelligence) companies are always evaluating the day-to-day environments and if they see a strategic opportunity to make a move, they probably will,” he added.
Nvidia, which manufacturers many of its products in Taiwan, announced on Monday it will manufacture up to $500 billion of AI chips and supercomputers entirely in the U.S. over the next four years.
Trump touted Nvidia’s announcement, stating “without tariffs, they wouldn’t be doing it,” though Ezell noted Nvidia is in a strong economic position to do so the move cannot be compared to other companies.
Some in the business world have publicly hinted at frustrations with the fluctuating messaging.
“They don’t know, even if something is announced, whether two days later it’s not changed again,” DHL Group CEO Tobias Meyer said in an interview on Bloomberg Television over the weekend. “You really see some fatigue of decision makers in manufacturing fand also in the distribution sector.”
“Shark Tank” investor and Trump ally Kevin O’Leary also knocked the Trump administration for its mixed messages on tariffs, calling the environment “chaotic.”
“It’s a little chaotic from the point of view that you don’t get a consistent message out of the administration. I admit that’s a problem,” O’Leary told Fox Business Network on Monday.
