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How Tariffs Are Reshaping IT Procurement and Planning
First threatened in April 2025, the U.S. administration has implemented substantial tariffs, many affecting the technology sector, since then. Notably, a 50% tariff on copper imports took effect on August 1, impacting semi-finished and finished copper products essential for electronics and data centers. Additionally, tariffs ranging from 15% to 25% have been imposed on goods from Japan and South Korea, countries that are major suppliers of semiconductors and advanced electronics. The constant evolution of the U.S. tariff strategy has made it particularly challenging for both consumers and technology companies trying to stay ahead of the impact. While the government continues to negotiate globally, the question for many small to mid-sized businesses within the U.S. is how to navigate these pricing shifts and potential shortages without breaking the budget or slowing productivity reliant on technology.
Key Takeaways
- U.S. tariffs in 2025, including levies on copper imports and goods from Japan and South Korea, are significantly increasing costs for technology manufacturers and IT infrastructure projects.
- These tariffs are prompting a realignment of global supply chains, with companies shifting production to countries like India and Vietnam to mitigate tariff impacts.
- IT leaders must adopt proactive strategies to navigate the evolving trade landscape.
How Tariffs Impact the Technology Supply Chain
Because tariffs act as taxes on imported goods and components, and technology companies rely on imported parts, such as semiconductors, consumers and businesses should expect to see prices reflect those higher manufacturing costs. Increased importing and production costs may be passed on to consumers through higher prices for products like smartphones, laptops, and other electronic devices. Let's dig a little deeper, keeping in mind that this policy has shifted dramatically several times since initially announced in early 2025, and is likely to continue to evolve.
Increased Costs for Materials: While adjustments excluding raw copper from the August 2025 copper tariff levied by the U.S. have helped to slow price increaes for a metal critical to manufacturing electronics, renewable energy systems, and military applications. the tax continues to impact finished copper products used in technology production.
This increase affects manufacturers reliant on copper wiring, chips, and cooling systems in data centers. While the stated intent is to shift usage toward U.S.-produced raw materials, the U.S. produced only about 5% of the 23 million tons of copper produced globally last year, according to the U.S. Geological Survey. In fact, U.S. copper production has fallen 20% over the last decade, and scaling up production may not be easy since building new mines can take nearly three decades.
Semiconductor Supply Disruptions: The tariffs on imports from Japan and South Korea, which continue to be negotiated, will likely disrupt the supply of semiconductors, memory chips, and OLED panels. Companies like Samsung and SK Hynix, key providers of DRAM and NAND chips, are affected, leading to potential delays and increased costs in the production of consumer electronics and electric vehicles. Changes to supply chains can be complex and time-consuming, potentially leading to disruptions and delays in the production and delivery of technology products.
Realignment of Global Manufacturing: Tariffs are prompting companies to shift manufacturing away from China to countries like India and Vietnam, according to the Cato Institute. For instance, Samsung is increasing its investment in India to mitigate the effects of U.S. tariffs on exports. Reshoring or nearshoring production facilities to the U.S. or nearby countries might become more attractive, and while a strategic option that has been discussed since COVID, this approach involves significant investment and time, according to TechTarget. Technologies that may be impacted the most include:
- Artificial intelligence (AI): The cost of developing and deploying AI models could increase due to higher hardware costs resulting from tariffs on chips and other components.
- Data centers: Tariffs could raise the cost of building and operating data centers, which are essential for cloud computing and AI infrastructure.
What are the implications for IT planning?
Increased costs for hardware components due to tariffs are likely to put a strain on IT budgets, regardless of the size of your business. Organizations may face higher prices for servers, networking equipment, and storage devices. The combination of price fluctuation and supply chain slowdown means companies should be proactive with IT roadmaps and talk to technology partners about procurement strategies. Those organizations planning expansions or large-scale IT investments should be particularly watchful in the next few months.
The best defense is a solid and thoughtful plan for sourcing and buying the technology tools your organization depends on. Your MSP can help by leveraging its vendor relationships to gain better insight into the full scope of potential pricing and supply chain issues, as well as working collaboratively with you to plot out a plan for the next year or two. Options may depend on your needs or even your location; challenges may be different in New York City than Los Angeles.
Navigating the complexities of the 2025 tariff landscape requires proactive planning and strategic investments. By understanding the implications and adopting adaptive strategies, businesses can mitigate risks and maintain resilience in their technology supply chains.
For further information and assistance in developing a tailored IT strategy in response to these changes, please contact our team for a consultation.
