Dive Brief:

• Despite an exemption for semiconductor imports, Trump administration tariffs will likely raise data center development costs and could chill investment in the sector, with proposed and under-construction facilities affected more than operating data centers, analysts say.
• “Any data center buildout where the product is not made in the U.S. is going to be affected,” even as durable inventory stockpiles and long development lead times blunt the financial impact in the near term, said Ashish Nadkarni, group vice president and general manager for worldwide infrastructure research at IDC.
• The tariffs are also likely to raise prices and worsen supply chain constraints for critical power infrastructure, potentially delaying development and pushing data centers toward more flexible power management solutions, said Tyler Norris, Ph.D candidate at Duke University and co-author of a February report on data center load flexibility.

Dive Insight:

President Trump on April 9 announced a 90-pause that will leave a 10% tariff on most countries to allow trade officials time to negotiate amounts going forward with the administration. China is the big exception. It faces a tariff of 125% immediately. 

Notwithstanding what the final amount will be on each country, the tariffs are expected to impact major suppliers of computing, cooling and power equipment. Imports from the European Union (20%), South Korea (24%), Japan (25%), Taiwan (32%) and especially China (up to 125%) all faced stiff levies, according to data collected by CBS News. 

Like Trump’s 90-day climbdown, the semiconductor exemption may only be a temporary reprieve for trading partners like Taiwan and South Korea, industry analysts told The New York Times last week. High-performance computer chips are complex components, with a convoluted global supply chain to match. Even those assembled in the United States typically leave the country to be incorporated into finished products like smartphones and network servers, they said.

Technology companies then ship those products into the United States, triggering the import tax, IDC’s Nadkarni said.

The Trump administration may hope to spur data center suppliers to build more final manufacturing capacity in the United States, but that won’t happen overnight and likely won’t result in a total reshoring of data center supply chains due to lower labor costs abroad, Nadkarni said.

“As we know, the U.S. is not the cheapest place to build servers, which is why those manufacturers set up in China and Taiwan in the first place,” he said.

Still, there’s some indication that major technology companies will adjust if the trade war endures. In February, before the initial tariff announcement, Apple announced plans to expand manufacturing capacity in nearly a dozen states and open a 250,000 square-foot U.S. server factory in 2026 as part of a $500 billion, four-year investment strategy, according to DesignNews.

Whether those servers — and any other data center components manufactured in the U.S. — can compete on cost with tariff-vulnerable imports remains to be seen. Unless the trade war grinds on for years, it may not matter because tech companies typically have long-term supplier contracts and local inventory ready for deployment, Nadkarni said. It could be six months or longer before any tariff impacts show up in affected companies’ financial reports, he added.

But if the tariffs prove durable, major importers could try to renegotiate contracts with overseas suppliers where reshoring manufacturing isn’t feasible. They’re less likely to stockpile servers and other computing equipment because those items tend to depreciate and become obsolete quickly, Nadkarni said.

Data center developers and operators face a different calculus for the power generation and electrical systems critical to their facilities’ operations. If tariffs do exacerbate existing supply chain constraints, such as high-voltage transformer lead times that can already stretch beyond two years, firms could make do with what they have, Duke University’s Norris said.

“Tariffs appear likely to increase the value of solutions that make better use of the existing grid, such as grid-enhancing technologies, flexible load and connect-and-manage approaches,” he said.

Tariffs may also complicate financing for new power generation and transmission projects that would benefit data centers, delaying critical infrastructure deployment and upending project economics, Norris added.

“If the tariffs stay put, then a lot of macro-level changes are going to happen,” Nadkarni said.