Trump tariffs could raise prices on technology like laptops, smartphones and AI
Workers weld acid batteries at the Leoch International Technology Ltd. factory in Saltillo, Coahuila, Mexico, on Monday, Oct. 7, 2024.
Mauricio Palos | Bloomberg | Getty Images
The world’s most valuable chipmaker and the world’s largest contract manufacturer for electronics announced in November that Foxconn was building a massive factory in Guadalajara, Mexico, to assemble Nvidia’s artificial intelligence servers.
Starting in early 2025, Nvidia would start producing its hotly demanded GB200 NVL72 server racks in Mexico, the two companies said.
That announcement reflects what could be at risk if President Donald Trump’s blanket tariffs go into effect. Trump is expected to reveal more details on which specific tariffs will be placed on imports from China, Canada, and Mexico on Saturday.
With Apple, Microsoft and Tesla reporting their December quarter earnings this week, investors will want to know how Trump’s threats of blanket tariffs on the country’s top trading partners could affect their businesses.
Those firms already grappled with proposed tariffs on consumer products from China in 2018, as well as China’s retaliation. But Trump’s proposed tariffs on electronics from Mexico would be a new wrinkle.
That’s because many companies specifically expanded production in the country in a so-called nearshoring effort in response to Covid disruptions and the tariffs from the first Trump administration.
“If we increase the tariffs on Mexico, it’s actually penalizing the companies that have been very progressive and trying to make great strides and restructure their supply chain,” said Richard Barnett, chief marketing officer of Supplyframe, a Siemens subsidiary that makes software which tracks electronics component prices and lead times.
Electronic products imports from Mexico rose from $86 billion in 2019 to $103 billion in 2023, or about 18% of total electronics imports, according to the International Trade Commission. It’s the second-largest source for electronic products imports in the U.S. after China, which reported $146 billion in imports in 2023.
In addition to Foxconn, Chinese electronics manufacturers Lenovo and Hisense made splashy announcements in the past few years about building factories in Mexico. Flex, a Singapore-based contract manufacturer for gadgets and electronics, says it is the largest exporter in the Mexican state of Jalisco.
Trump may be looking to close a “loophole” where Chinese companies can avoid tariffs on their end by expanding in Mexico, said Simon Geale, executive vice president of Proxima, a supply chain consultancy that’s part of Bain & Co.
“If you look at Chinese investment into Mexico, it has gone through the roof in the last three to five years,” Geale said.
Even with Mexico’s growth, China is still the biggest source for electronics imports in the U.S. It accounts for 78% of production of smartphones, 87% of video game consoles and 79% of laptops, according to the trade group the Consumer Technology Association, or CTA. About a quarter of Chinese imports were electronic products.
While high-value and high-margin products like Nvidia’s GPUs are less sensitive to tariffs, many of the secondary parts needed to construct multibillion-dollar AI data centers — communications, storage and power management parts, for example — are vulnerable to price changes and import duties, Barnett said. Supplyframe’s price index shows a 6% year-over-year increase for electronic components in the fourth quarter of 2024, after Trump started threatening tariffs.
Nvidia CEO Jensen Huang was asked about the potential impact of tariffs in November, shortly after Trump’s election victory.
“Whatever the new administration decides, we’ll, of course, support the administration, and that’s our highest mandate. And then after that, we do the best we can and just as we always do,” Huang said at the time, adding that the company would comply with regulations.
Foxconn did not respond to a request for comment, and Nvidia declined to comment.
Raising prices
Trade groups, academics and even the chief of the World Trade Organization warn that trade wars spurred by Trump’s tariffs could slow global commerce and raise prices for consumers. Analysts have said the Trump administration may be looking at the tariffs as a way to negotiate with other countries over issues such as drug trafficking and migration, although the president has denied this.
“The four big implications of tariffs that I foresee are higher prices, fewer rate cuts from the Fed, slower growth and fewer new jobs,” said Brett House, professor of professional practice at Columbia Business School.
It’s still unclear exactly how large the tariffs could be this time around.
On the campaign trail, Trump talked about tariffs of up to 60% on China and 10% on all other imports. In his first week in office, Trump has backed off from the largest duties, discussing a 10% tariff across the board from Mexico and Canada and a 25% tariff on goods from China.
A 60% tariff on China would be a huge blow to American consumers, according to a report by the CTA.
Laptop and tablet prices might increase by 45%, video game consoles by as much as 40% and smartphones by as much as 26%. That’s a $213 increase in the average price of a smartphone, according to the CTA.
“It’ll affect the unit sales, meaning that each product will go up in price significantly,” CTA CEO Gary Shapiro said.
A key difference between these tariffs and the ones from 2018 is that Trump has threatened placing tariffs that could apply to all products, whereas the 2018 tariffs were targeted on specific product codes and categories, and companies could apply for waivers for their goods.
Whether Trump follows through on placing tariffs across the board remains to be seen. The Washington Post reported earlier this month that the Trump administration is considering imposing fees only on certain sectors.
Experts at Columbus Consulting, a consulting firm focused on retailers, say their clients have already shifted budgets to account for increased costs. The firm is recommending that clients hold off on drastic measures – such as moving production into other countries or aggressively stockpiling extra inventory in advance – until they know what exactly will go into effect.
“We need to see the definition of what’s going to be tariffed and how much and when, and specifically which products,” said Jeff Gragg, managing partner at Columbus Consulting. “Until we get more specifics around it, overreacting can only put you in a dangerous position.”
Attempts to mitigate tariff expenses can end up being costly, whether that’s the increased price of freight or the opportunity cost of tying up capital in inventory, Gragg said. Some firms will have to pass the costs on to consumers, he said.
But the current uncertainty around import duties isn’t necessarily a sea change from the past few years.
Some electronics still have tariffs on them from Trump’s first term. Semiconductors from China currently have a 50% tariff, for example. The Biden administration largely kept the import duty regime from the first Trump administration in place, giving firms a few years with less drastic changes, but many still had to grapple with import duties.
“Supply chains thrive on predictability, and the only thing that’s predictable about Trump is that he’s going to be unpredictable,” Geale said.
Technology
Apple supplier Qorvo sees swift reversal in stock price after warning of weakness in smartphone parts
Qorvo logo of a US semiconductor company is seen displayed on a smartphone and pc screen.
Sopa Images | Lightrocket | Getty Images
Shares of semiconductor supplier Qorvo, which counts on Apple for an outsized amount of revenue, plunged in extended trading after the company warned of potentially flat sales to its “largest customer.”
Qorvo’s stock initially popped after the company reported better-than-expected fiscal third quarter earnings. Here’s how the company did compared with analysts’ expectations based on a survey by LSEG:
- Earnings per share: $1.61, adjusted, vs. $1.20 expected
- Revenue: $916 million vs. $902 million expected
Qorvo, which makes radio frequency chips used by smartphone manufacturers, offered better-than-expected guidance for the current quarter, saying it expects revenue to come in at $850 million, ahead of the $841 million forecast by analysts. The company expects earnings of $1 per share, versus the 86 cents projected.
However, the stock turned around dramatically soon after the start of the earnings calls, when CEO Bob Bruggeworth told analysts that sales to its top customer would show little if any growth in the fiscal year ending March 2026.
“For FY 2026, we’re currently forecasting revenue at our largest customer to be flat to up modestly,” Bruggeworth said.
The stock was down 3.4% after the call.
Qorvo doesn’t name the customer in its earnings report but the company said in its annual filing last year that Apple accounted for 46% of revenue in fiscal 2024. On the call, Qorvo said its largest customer represented just over half of revenue in the December quarter.
Analysts expect total revenue for fiscal 2026 of $3.85 billion, representing growth of just over 4% from a year earlier, according to LSEG.
Bruggeworth said the company also faces challenges with its Android business. Revenue there will fall by about $150 million to $200 million in fiscal 2026 and by about the same amount the following year.
“Most of that will be in China,” he said.
Earlier this month, activist investor Starboard Value revealed a 7.7% stake in Qorvo.
WATCH: Apple’s superficial problem is there’s not enough demand, says Jim Cramer
Technology
Google reclassifies U.S. as ‘sensitive country’ alongside China, Russia after Trump’s ‘Gulf of America’ comments
Jaque Silva | Nurphoto | Getty Images
Google‘s maps division on Monday reclassified the U.S. as a “sensitive country,” a designation it reserves for states with strict governments and border disputes, CNBC has learned.
The new classification for the U.S. came after President Donald Trump said his administration would make name changes on official maps and federal communications. Those changes include renaming the Gulf of Mexico as the “Gulf of America” and renaming Mount Denali as Mount McKinley.
Google’s order to stop designating the U.S. as a “non-sensitive” country came on Monday, according to internal correspondence viewed by CNBC. That’s when the company announced it would change the name of the body of water between the Yucatan and Florida peninsulas to the “Gulf of America” in Google Maps after the Trump administration updates its “official government sources.”
The decision to elevate the U.S. to its list of sensitive countries illustrates the challenges that tech companies face as they try to navigate the early days of a second Trump presidency. Since the start of the year, Meta, TikTok, Amazon and others have adjusted their products and policies to reflect Trump’s political views, policies and executive orders.
Trump had a rocky relationship with Silicon Valley throughout his first presidency and didn’t shy away from criticizing the sector throughout his 2024 campaign. More recently, tech executives, including Google CEO Sundar Pichai, have pursued closer ties with Trump, with several standing behind the president during his inauguration.
Google’s list of sensitive countries includes China, Russia, Israel, Saudi Arabia and Iraq, among others. The label is also used for countries that have “unique geometry or unique labeling,” according to internal correspondence reviewed by CNBC.
The U.S. and Mexico are new additions.
The “sensitive” classification is a technical configuration that signifies some labels within a given country are different from other countries, a company spokesperson told CNBC.
It’s unclear if Google’s reclassification of the U.S. extends beyond its “Geo” division.
In this photo illustration, the Gulf of Mexico is displayed on the Google Maps app on Jan. 28, 2025 in San Anselmo, California.
Justin Sullivan | Getty Images
With more than 2 billion monthly users, Google Maps is the world’s top navigation app.
Some team members within the maps division were ordered to urgently make changes to the location name and recategorize the U.S. from “non-sensitive” to “sensitive,” according to the internal correspondence. The changes were given a rare “P0” order, meaning it had the highest priority level and employees were immediately notified and instructed to drop what they were doing to work on it.
Google’s order states that the Gulf of America title change should be treated similar to the Persian Gulf, which in Arab countries is displayed on Google Maps as Arabian Gulf.
“We’ve received a few questions about naming within Google Maps,” the company said in an X post. “We have a longstanding practice of applying name changes when they have been updated in official government sources.”
Google added that the name Gulf of Mexico will remain displayed for users in Mexico. Users in other countries will see both names, the company said.
When the Obama administration changed the name of the Alaska mountain from Mount McKinley to Denali in August 2015, Google updated Maps to reflect the name change, a Google spokesperson told CNBC.
WATCH: Twenty years in, Google Maps turns to AI to maintain dominance
Samuel Boivin | Nurphoto | Getty Images
The U.S. Navy has instructed its members to avoid using artificial intelligence technology from China’s DeepSeek, CNBC has learned.
In a warning issued by email to “shipmates” on Friday, the Navy said DeepSeek’s AI was not to be used “in any capacity” due to “potential security and ethical concerns associated with the model’s origin and usage.”
A spokesperson for the U.S. Navy confirmed the authenticity of the email and said it was in reference to the Department of the Navy’s Chief Information Officer’s generative AI policy.
The announcement followed DeepSeek’s release of its powerful new reasoning AI model called R1, which rivals technology from OpenAI. The DeepSeek model is open source, meaning any AI developer can use it. The DeepSeek app has surged to the top of Apple’s App Store, dethroning OpenAI’s ChatGPT, and people in the industry have praised its performance and reasoning capabilities.
DeepSeek’s pronouncements rocked the capital markets on Monday due to concerns that future AI products will require less-expensive infrastructure than Wall Street has assumed. DeepSeek said in late December that its large language model took only two months and less than $6 million to build despite the U.S. curbing chip exports to China three times in three years. That’s a tiny fraction of the amount spent by OpenAI, Anthropic, Google and others.
Shares of AI chipmakers Nvidia and Broadcom each dropped 17% on Monday, a route that wiped out a combined $800 billion in market cap. Those stocks led a 3.1% drop in the Nasdaq.
The Navy’s warning landed days earlier.
“We would like to bring to your attention a critical update regarding a new AI model called DeepSeek,” the email said. The memo said it’s “imperative” that team members do not use DeepSeek’s AI “for any work-related tasks or personal use.”
The email was sent on Friday morning to the distribution list OpNav, which stands for Operational Navy, indicating it was an all-hands memo. The warning was based on an advisory from Naval Air Warcraft Center Division Cyber Workforce Manger.
It said recipients were to “refrain from downloading, installing, or using the DeepSeek model in any capacity.”
DeepSeek said on Monday it would temporarily limit user registrations “due to large-scale malicious attacks” on its services, before later resuming operations as usual.
OpenAI CEO Sam Altman, accompanied by U.S. President Donald Trump, Oracle CTO Larry Ellison (R), and SoftBank CEO Masayoshi Son (2nd-R), speaks during a news conference in the Roosevelt Room of the White House on January 21, 2025 in Washington, DC.
Andrew Harnik | Getty Images
President Donald Trump, who took office last Monday, said the sudden rise of DeepSeek “should be a wake-up call” for America’s tech companies. Trump is currently trying to keep Chinese social media app TikTok alive in the U.S., after lawmakers determined that the service must be banned or sold due to national security concerns. Trump was in favor of banning TikTok in his first administration before flip-flopping on the matter.
Venture capitalist David Sacks, Trump’s AI and crypto czar, posted on X on Monday that DeepSeek R1 “shows that the AI race will be very competitive,” adding that he is “confident in the U.S. but we can’t be complacent.” Meta, which has developed its own open-source models called Llama, started four DeepSeek-related “war rooms” within its generative AI department, The Information reported.
Alexandr Wang, CEO of Scale AI, told CNBC last week that DeepSeek’s last AI model was “earth-shattering” and that its R1 release is even more powerful. He said it’s “roughly on par with the best American models” and described the race between the U.S. and China as an “AI war.” Wang’s company provides training data to key OpenAI, Google and Meta.
Trump’s first big move in AI came last week, when his administration announced a joint venture dubbed Stargate between OpenAI, Oracle and SoftBank to invest billions of dollars in AI infrastructure in the U.S.
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