Trump Tariffs Shake World Economy, Rattling Silicon Valley

Silicon Valley companies, especially those that rely heavily on international supply chains, have seen their stocks drop precipitously since President Trump revealed his tariff plan on April 2.

A 10% tariff on all imported goods went into effect on April 5 and higher tariffs on specific countries (like China and Mexico) are scheduled to begin on April 9. While it’s unclear whether all the tariffs are here to stay, companies are already acting as if Trump will deliver on his threats in the long term.

More of Apple’s iPhones, famously constructed from parts sourced all over the world, may soon be assembled in India to sidestep Chinese tariffs that could raise the hardware cost of the iPhone 16 Pro by $300 each. Nintendo is delaying pre-orders for the new Switch 2 in the U.S. while it games out-market conditions. It’s about to become much more expensive for Amazon, Meta, Google and Microsoft to build the supercomputers to power artificial intelligence, and while they have the cash reserves to stay in the game, rivals in China and elsewhere will become a graver threat.

The global economy has run on international trade for half a century. So, Trump’s decision to upend the status quo is disruptive for global industries like tech.

“Apple and Tesla and other leading firms are selling to people all across the world,” said economics professor Neale Mahoney, who is also director of the Stanford Institute for Economic Policy Research. “We’re going to really feel that in not just the stock price of these firms, but their decisions around investment and expansion, and ultimately, their decisions to pull back.”

Russell Hancock, head of Joint Venture Silicon Valley, which studies economic and social trends in the region, says he can’t see any silver lining for tech companies, whether or not they’re involved in manufacturing or consumer retail. Meta, Google and Amazon, for instance, enjoy enormous ad revenues that could suffer from a foreign retreat in spending.

“Personally, I think [Trump’s new tariff regime] is crazy,” Hancock said. “What I see is instability, retaliation [from other countries], and the upsetting of international systems that have been in place for a very long time.”

He also predicts more layoffs in the Bay Area if Trump doesn’t change course soon. But Hancock isn’t just talking about tariffs.

The San Francisco Bay Area has historically enjoyed a proximity to top academic institutions like Stanford University, University of California, Berkeley and San José State University, providing a ready talent pool and a steady stream of start-ups. However, those universities are facing uncertainties and enacting job freezes as the Trump administration tries to limit the National Institutes of Health research funding they rely on, as well as research into emerging technologies like quantum computing.

The Trump administration is also taking on the H1B visa popular in Silicon Valley by shutting down the Office of the Citizenship and Immigration Services Ombudsman, which helps applicants who are struggling to get their cases processed. Tech companies are telling immigrant employees on visas not to leave the U.S., for fear they might not be let back in.

“We’re already seeing that companies are expanding elsewhere, at a faster rate than they are here, in Silicon Valley,” Hancock said. “If you’re a major tech company, you’ve also been adding people in Boston, Miami, London and Asia. [Tariffs] will accelerate that trend.” He also anticipates that companies and individuals from abroad will not be as keen to invest in the Bay Area as they have been over the last half century.

Some Valley watchers are holding out hope that the president is rattling his sabre as a bargaining tactic to wring more concessions from the nation’s trading partners. But venture capitalist, entrepreneur, and technology investor Chamath Palihapitiya, co-host of the mostly libertarian “All-In” podcast, said on the podcast he doesn’t believe Trump will back down because the president has consistently spoken in favor of tariffs as a macroeconomic tool to restore American manufacturing supremacy lost over the last 40 years.

Missing from the public conversation, in news articles and social media, are the direct voices of tech company leaders. This is in large part due to fears of attracting negative attention from the Trump administration. “CEOs with large global supply chains can’t be outspoken on this topic publicly because they need to cut deals,” Aaron Levie, chief executive of Box, wrote on social media platform X. “But this is the tone of the convos happening right now,” he added, reposting pointedly negative comments about the tariffs from tech analyst Dan Ives.

“If these tariffs (in current form/rates) hold, there is no debate … it would set the US tech world back a decade in our opinion while China is the clear winner,” Ives wrote.

Ives continued, “In one day, this tariff policy, if enacted, will create an upside down supply chain, massive costs … and slow down US tech innovation.”