Former President Ronald Reagan once cautioned, "High tariffs inevitably lead to retaliation… and less and less competition," but Donald Trump is pushing forward with steep trade barriers anyway, and U.S. tech companies could be among the hardest hit.
What Happened: In his April 1987 radio address, President Reagan made a passionate case against protectionism, warning that tariffs would "hurt every American worker and consumer," drive prices higher, and ultimately lead to job losses.
While it may look like they're doing the patriotic thing, Reagan said, over the long run such trade barriers hurt every American worker and consumer.
See Also: Trump’s Tariff Delay Gives America’s Favorite Truck Temporary Relief
Fast forward to 2025, Trump — now in his second term — is embracing the very strategy Reagan opposed. He has doubled tariffs on Canadian steel and aluminum imports to 50%. In early February, he implemented a 10% tariff on nearly all Chinese imports, increasing it to 20% earlier this month.
Trump argues these measures are meant to protect American jobs and national security, but the consequences are already beginning to ripple across the tech sector and other businesses.
China has retaliated with 10-15% tariffs on U.S. exports, including agricultural products, coal, liquefied natural gas, pickup trucks, and select sports cars.
Additionally, Beijing has imposed export restrictions on American companies in the aviation, defense, and technology sectors while launching an anti-monopoly probe into Alphabet Inc.'s GOOG GOOGL Google.
Why It's Important: The stakes for U.S. technology are massive. Semiconductors — the backbone of everything from AI to electric vehicles — are overwhelmingly manufactured overseas.
The U.S. designs many of the world's most advanced chips but relies on Taiwan, China, and South Korea for over 80% of its supply.
Companies like Apple Inc. AAPL, Nvidia Corporation NVDA and Advanced Micro Devices Inc. AMD are now facing rising costs for Chinese-made components, while cloud giants such as Amazon.com, Inc. AMZN, Microsoft Corporation MSFT and Google may see data center expansions stall due to higher prices on imported servers and networking equipment.
Consumer electronics are also in the crosshairs. Laptops, smartphones, gaming consoles, and electric vehicles could all see price hikes as tariffs raise production costs. Apple may be forced to raise iPhone prices, while EV makers like Tesla Inc. TSLA and Ford Motor Company F could face tighter margins.
Retailers are bracing, too. Target Corp's TGT CEO Brian Cornell earlier this month warned of rising prices on imported goods "within days," as companies scramble to relocate manufacturing out of China to tariff-free zones like India and Vietnam.
The U.S. faces a pivotal moment: double down on foreign dependency or absorb the costs of rebuilding self-reliance, and there are some indications that companies are scrambling to.
Intel Corp INTC, Taiwan Semiconductor Mfg. Co. Ltd. TSM, and Samsung Electronics Co. SSNLF are pouring funds into new semiconductor manufacturing facilities across Arizona, Texas, and Ohio.
Last month, Apple announced plans to invest more than $500 billion in the U.S. over the next four years. This initiative includes the creation of 20,000 jobs and the development of an AI server plant in Texas.
Even so, as Reagan put it nearly four decades ago: "Let's not go for the quick political advantage… America's jobs and growth are at stake."
Photo Courtesy: Mark Reinstein via Shutterstock
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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