Analyst(s): Alex Smith
Publication Date: April 30, 2025
What is Covered in this Article:
- A recap of the tariff timeline, including key announcements, retrenchments, exemptions, and retaliations.
- An overview of which key technology industries will be most directly impacted by these tariffs and their future potential impacts based on further tariff rollouts.
- An overview of how the impact will vary by technology company, based on their exposure to China-based manufacturing, and insights into how many vendors are considering diversifying their supply chains.
The News: The tariff environment has been extremely fluid in 2025, with major announcements and pullbacks announced almost every month this year. The most sweeping round of tariffs came on April 9th, with a blanket 10% tariff for nearly every importing partner of the United States and individualized reciprocal tariffs that vary by country. On April 10th, the reciprocal tariffs were suspended for 90 days to allow countries to negotiate trade deals. The exception was China, which placed its tariffs on US imports, further prompting the United States to raise tariffs again.
On April 11th, US Customs and Border Protection issued guidance that electronics products (including smartphones, laptops, semiconductors, memory cards, and others) would be excluded from the reciprocal tariffs and the baseline 10% tariffs. These exemptions would reportedly be backdated to April 5th. However, shortly after, White House Deputy Chief of Staff on Policy Stephen Miller indicated that the 20% tariffs on China related to fentanyl would still apply to electronic goods.
On April 14th, the Trump Administration announced three Section 232 Investigations, one focusing on the semiconductor industry. These investigations are intended to give the President authority to impose restrictions on imports due to national security concerns under the Trade Expansion Act of 1962. This is coupled with various statements from the White House that further sector-specific tariffs would likely hit the semiconductor industry.
Tariff Watch 2025 – Has the Tech Community Dodged a Bullet?
Analyst Take: The current trade war is so expansive that few (if any) companies can claim not to be impacted by it, whether directly or indirectly. It is also a very fluid environment, with business leaders seemingly perplexed about the implications, given the rapid nature of announcements and retrenchments. At a political level, it is clear that the Trump Administration is using tariffs as a tool to bring countries to the negotiating table. It is unclear as to the severity of tariffs that will remain in place, but all comments from the administration suggest that there will, at minimum, be some tariffs that will exist going forward.
The clear goal is to have more manufacturing capabilities onshore, especially in critical industries such as semiconductors. In this respect, the Trump Administration agrees with the Biden Administration. However, the tools to achieve it are vastly different, considering Biden’s CHIPS Act versus the current tariff rollouts. However, while the desire to onshore these capabilities may be there, the ability to achieve these goals is far more complex. Supply chains across numerous industries have spent decades establishing globalized models, resulting in disparate centers of excellence in different parts of the world; many of which are not in the United States.
Take the semiconductor industry as a clear example. While the US has many domestic capabilities, there remain many gaps, according to a recent Futurum Research report, “U.S. Geopolitics Will Speed Up Semiconductor Supply Chain Deglobalization”. In this report, we see that the US has strong capabilities in key parts of the value chain, including producing key chemicals, designing photomasks, and advanced node memory fabrication (to name a few). However, it has limited capabilities in bare wafer production, EUV lithography, hybrid bonding, and advanced packaging services. Repatriating, or developing the many capabilities required, will take time and investment, which will likely have a cost factor to consider, too.
Impact Severity will Vary
In the meantime, the industry will have to navigate a highly fluid tariff environment. Supply chain leaders, fresh off the COVID pandemic and the last US-China trade war, are much better positioned to navigate this current climate. Many companies have already begun diversifying their supply chains away from dense hubs like China. However, in most cases, manufacturing has shifted to other markets rather than back to the United States. Countries such as the Czech Republic, Hungary, India, Mexico, Poland, Saudi Arabia, Thailand, and Vietnam have seen more investment in technology manufacturing factories over the past five years. Nearly all these markets are now at risk of having varying tariffs applied.
Some top-line industry trends are worth highlighting. As it currently stands, most active tariffs exist with China, and some sectors heavily rely on that country to manufacture those products. In fact, across any product category (including non-tech products), the two top imports from China are smartphones and notebook PCs (according to Comtrade). Another technology category that leans heavily on China is the networking industry, particularly as its market leader, Cisco, does the majority of its manufacturing there.
When it comes to semiconductors, the main source of finished products is Taiwan and South Korea, given that it is where the advanced node fabrication occurs, as well as the final packaging services. China’s semiconductor capabilities, comparatively, are behind those of the two countries. However, it doesn’t mean China is not hugely instrumental in the semiconductor supply chain. At one end of the spectrum, they are the leading supplier of critical rare earth minerals that go into semiconductor manufacturing (controlling more than 75% of the world’s supply of Rare Earth Elements (REE) and Silicon / Polysilicon). In contrast, at the other end, they are the leading producers of many of the products that chips go into, as has already been highlighted. So while the semiconductor industry may be largely safe from the direct tariffs applied to China, indirectly, they will be impacted further downstream. Such is the complex nature of global supply chains.
Should the reciprocal tariffs start to hit other countries, other sectors will feel the impact. For example, a large portion of the global hard disk drives (HDDs) are produced in Thailand, which is threatened by a 36% tariff looming over it. Likewise, Taiwan and South Korea have 32% and 25% tariffs, respectively, as part of the reciprocal tariff plan, which would significantly disrupt the silicon industry. Even if semiconductors remain exempt, the possibility of a sector-specific tariff remains following the outcome of the Section 232 Investigations.
Figure 1: TariffWatch, April 28, 2025 – Cost of Goods (COGS) Impact by Vendor
Not all technology vendors will be impacted equally by the tariffs on China. For example, IBM has largely diversified away from hardware, with its infrastructure business accounting for less than a quarter of its total revenue. Furthermore, IBM highlighted in its recent earnings call that goods imported into the US represent less than 5% of IBM’s overall spending.
Many companies have also been diversifying away from China, though the degree to which they have done so will vary significantly. Samsung, for example, has mostly exited China in its smartphone, laptop, and television businesses (partly due to its inability to compete with local players in the Chinese market). Instead, it leans on markets such as India and Vietnam. Also, Super Micro Computer has moved significant portions of its manufacturing outside of China due to supply chain hacking allegations against it in 2019, and the subsequent need to distance itself from the Chinese market.
Almost all the vendors heavily exposed to China tariffs, including Apple, Cisco, Dell, Hewlett-Packard Enterprise, HP Inc., and Lenovo, have diversified their supply chains to some degree, with India, Mexico, Thailand, and Vietnam being some of the biggest beneficiaries. For example, on April 25th, Bloomberg and Reuters reported that Apple was holding emergency planning talks to shift the majority of its US-bound iPhones to be manufactured in India. Companies are re-evaluating the degree to which they can lean on China going forward, but the U.S. is still not currently high on the plans for many.
What to Watch:
- The outcome of trade talks between the US and many nations will determine what level of tariffs, if any, will ultimately be imposed.
- More vendors will plan to shift to other markets, such as India and Mexico, and potentially even newer hubs, such as Saudi Arabia (which has its own ambitions to develop industries beyond petroleum). The US is unlikely to be on the roadmap in a major way unless the government can provide more specific incentives and long-term guarantees.
- Any specific sector-specific tariffs that hit the semiconductor industry will have rippling effects on all technology stack layers, including hardware devices, cloud and data center capex, and eventually, all the software industries that rely on compute.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
U.S. Geopolitics Will Speed Up Semiconductor Supply Chain Deglobalization
Tech Leaders Navigate Fluid Tariff Environment
Why 18A Can’t Come Too Soon for Intel’s AI PC Processor Business
Author Information
Alex is Vice President & Practice Lead, Channels & Go-to-Market at the Futurum Group. He is responsible for establishing and maintaining the Channels Research program as part of the overall Futurum GTM and Channels Practice. This includes overseeing the channel data rollout in the Futurum Intelligence Platform, primary research activities such as research boards and surveys, delivering thought-leading research reports, and advising clients on their indirect go-to-market strategies. Alex also supports the overall operations of the Futurum Research Business Unit, including P&L segmentation, sales and marketing alignment, and budget planning.
Prior to joining Futurum, Alex was VP of Channels & Enterprise Research at Canalys where he led a multi-million dollar research organization with more than 20 analysts. He played an integral role in helping the Canalys research organization migrate into Omdia after having been acquired in 2023. He is an accomplished research leader, as well as an expert in indirect go-to-market strategies. He has delivered numerous keynotes at partner-facing conferences.
Alex is based in Portland, Oregon, but has lived in numerous places, including California, Canada, Saudi Arabia, Thailand, and the UK. He has a Bachelor in Commerce and Finance Major from Dalhousie University, Halifax Canada.
