US President Donald Trump’s reciprocal tariff announcement on April 2 is sending chills across the spectrum. The latest wave of tariffs by the United States administration is expected to push technology prices, cause disruption in supply chains, and overall weaken the global IT spending in 2025.
The new tariffs on imported goods are expected to raise the prices of tech products in the US, adding to inflation concerns. Even before any clear signals of a broader slowdown appear in company earnings or official data, there appears to be an apprehension over a broader economic downturn. This is likely to make both businesses and consumers more cautious about investments in technology.
Market research firm IDC has predicted a 10 per cent hike in global IT spending for 2025. However, in March the estimated hike was five per cent, based on early signs of global economic slowdown. The projections came just ahead of the latest US tariff announcements; however, it seems to be becoming increasingly relevant. Consequently, IDC is expecting their baseline forecast to likely shift towards the lower end of that 5-10 per cent range.
In its blog, IDC mentioned that it was now preparing an updated scenario that accounts for a wider trade conflict. This can include not only more US tariffs but also retaliatory actions from other countries. Some countries may also target nations apart from the US in a bid to shield their economies from global instability. As of now the situation remains unpredictable.
The new tariffs are slated to take effect on April 9, and it may be revised or even delayed. On the other hand, China may introduce stimulus measures for economic stability in the short term. Regardless, the likelihood of a global recession is rapidly increasing. According to IDC, this growing uncertainty is already impacting the confidence levels among businesses and consumers who may slow down spending and investment in the upcoming months.
It is not just tech devices; the new US tariffs may raise prices of hardware and data centres. Experts suggest that even software and services will also be impacted over time as a result of the increase in cost of developing and delivering them. Many vendors may likely pass these higher costs on to consumers. Owing to lean inventories and fast production cycles, consumers in the US will feel price increases quickly. Manufacturers may have limited ability to adjust as the tariffs are currently broad and unfocused.
IT buyers have mostly remained loyal to key domains such as AI, security, and analytics. Even though the IT sector is particularly resilient, it may be disrupted owing to the rising pricing sensitivity. However, most service providers are continuing to invest in AI, and most businesses now treat IT spending as essential to operations. Nonetheless, a slowing economy and rising unemployment may lead to an overall decline in IT spending, especially for devices, infrastructure and new contracts.
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