U.S. vs. China trade war likely to hit data center, IT spending

The tech sector has been largely spared from President Trump's trade war on China, but the latest batch of tariffs has enough to hit the gear that goes into data centers.
Written by Larry Dignan, Contributor

The ongoing trade war between the U.S. and China -- and the latest $200 billion round of tariffs on Chinese goods coming to the U.S. -- are likely to lead to increased information technology costs for enterprises.

This week kicks off earnings season and rest assured there will be discussion of tariffs and how they are impacting business. Restoration Hardware and Daimler are just two of the early companies outlining how tariffs are impacting business.

Now it's time to hear from the tech industry.

The latest round of tariffs on Chinese goods include a bevy of non-tech goods. CBS News has what's in President Trump's tariff list and what's out and the Feds have the complete list.

Much of tech affecting consumers has been spared for now, but the latest round of tariffs impact network routers and computer components. The full list covers parts that go into digital signal processing, TVs, monitors and telecom gear.

Simply put, the tariffs on glass, insulating fittings and conduit tubing are going to add up.

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We don't quite know how much your router, switch or server is going to go up in price, but we do know some of that cost is going to be passed along to the tech buyer.

Play this out further and the escalating trade war is naturally going to hit the entire enterprise tech food chain. Some areas to watch:

  • Networking gear: The latest batch of tariffs already have routers and switches in the mix.
  • Servers: It's just a matter of time before prices start to creep up.
  • PCs: Keep in mind that contract manufacturers are based in China and largely use parts that'll be on a tariff list.
  • Smartphones: No pol is going to want to be known as the person responsible for raising your prices on treasured smartphones, but it's not a great leap to predict tariffs are coming.

Add it up and I don't see how the tech sector stays out of the tariff fray. What's unclear is how these tariffs will work through the supply chain and ultimately the data center and even cloud services. And the tech sector is likely to see the tariff impact just as businesses are spending in the fourth quarter and consumers are looking at electronics for the holiday season.


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