Trump's tariffs threaten costs for U.S. data centers

President Donald Trump supports artificial intelligence (AI) development and the data centers that support it. However, his tariffs could increase costs for U.S. businesses building these facilities. Data centers are essential for tech companies like Microsoft and Amazon, which are competing to lead in AI. The demand for data centers is growing and contributes significantly to U.S. economic growth. Yet, most of the hardware needed comes from overseas. Trump's tariffs, particularly a 20% duty on China and potential tariffs on Mexico, could add expenses. Analysts predict that tariffs may disrupt supply chains and increase project costs. Trump has called for U.S. investments in AI and has announced major spending plans with companies like SoftBank and Oracle. Last year, data centers contributed about 0.3% to economic growth, adding roughly $100 billion. Planned investments could rise sharply, but industry leaders are concerned about how tariffs might affect budgets and timelines. Experts believe that increased import costs could lead to price hikes on essential equipment like power transformers and circuit breakers. As U.S. firms rely heavily on foreign suppliers for machinery, Trump's trade policies could complicate efforts to revive domestic industry. American companies exporting data center equipment could also face challenges from tariffs imposed by other nations. Despite these risks, demand for new data centers remains high, and most projects are expected to move forward. Major tech firms are increasing their capital spending significantly, indicating confidence in ongoing AI investments. However, the broader impact of tariffs could still affect the economy. As trade tensions rise, industry experts emphasize that tariffs on imports will lead to higher prices across various sectors, including data centers.