How Are Tariffs Impacting Data Center Technology?

June 9, 2025

Since the beginning of his second term, President Trump has threatened harsh tariffs against various nations as part of a new strategy to reshore American industry and increase external revenue. These proposed tariffs have sent shockwaves across virtually all industries, especially those reliant on technology and material imports.

That said, the administration has made numerous changes to the proposed tariffs throughout the past few months. Many countries are in active negotiations with the U.S. to lower tariff rates as of May 2025, and most country-specific tariffs have been paused until July 2025. However, we may see some unexpected changes once these pauses are over.

With a high potential for future volatility, industry professionals must strategically plan how their companies will navigate supply chain disruptions, economic fluctuations and rising energy demands.

Understanding the Proposed Tariffs

As of April 2025, President Trump has implemented baseline reciprocal tariffs of 10% for all products entering the United States. However, the administration is in the process of determining different rates for certain products and countries that play critical roles in the data center industry.

Product-Specific Tariffs

The following products are or may be subject to increased tariffs regardless of their origin:

  • Aluminum: The administration implemented a 25% tariff on all aluminum imports on March 3, 2025.
  • Copper: The Trump administration may issue a 25% tariff on all copper imports based on the findings of an ongoing Section 232 investigation conducted by the U.S. Department of Commerce.
  • Integrated circuits: Imports of chips and microelectronics may also be under a 25% tariff based on a Section 232 investigation.
  • Semiconductors: Semiconductor imports are also currently under investigation and may be subject to tariffs in the future.
  • Steel: As of March 12, 2025, the administration has implemented a 25% tariff on all steel imports, which will impact construction and electrical products such as large power transformers (LPTs).

While these rates may be subject to change based on negotiations, these materials are likely to remain under tariffs due to security concerns and new America-first policies.

Country-Specific Tariffs

While the Trump administration has proposed various country-specific rates, most of these tariffs have been suspended until July 9, 2025. Negotiations are underway with multiple countries to adjust the proposed rates, though there is little certainty on what will happen next.

China is the most significant exception to the current baseline, with a reciprocal tariff rate of 125%. This rate also applies to imports from the Special Administrative Regions (SARs) of Hong Kong and Macau.

The Impact of Tariffs on Supply Chains

Tariffs can disrupt supply chains by increasing material costs, creating uncertainty about market outlooks and reducing the accuracy of predictive calculations like inventory planning and demand forecasting.

Some of the most notable impacts supply chains are likely to experience as a result of the impending Trump tariffs include:

  • Increased material costs: Structural steel and critical electrical components will become more costly due to the proposed tariffs, increasing capital expenditures for data center construction and growth.
  • Supply chain fragmentation: Different technical standards may clash as various international firms work through the new tariffs, requiring data center builders to determine which standards to prioritize in their projects.
  • Equipment and material shortages: Critical components for data center infrastructure and electronic functioning could be difficult to obtain until the supply chain is able to recover. The U.S. is already experiencing shortages of components required for large power transformers (LPTs) critical for powering data centers.

How Supply Chain Shifts Will Affect Data Centers

While some increases can be absorbed through supply chain adaptations, data center operators and developers will need to decide whether they will absorb the remaining costs or compensate by raising rent prices for tenants.

Some of the most significant aftereffects of tariff-related supply chain disruptions include:

  • Scalability challenges: As prices for construction materials and electronics components rise, new data center startups and scaling initiatives are likely to face greater financing challenges than in the past. Identifying potential ways to bring down costs, such as finding alternatives to regional suppliers, may help make scalability more accessible.
  • Delayed projects: Data centers switching to alternative suppliers may cause growth within the industry to slow for a period due to unexpected supply chain delays. These delays could be incredibly problematic as demand for data center resources surges.
  • Increased operational costs: In addition to increased capital expenses, routine data center operations will become more costly due to higher equipment costs. While switching to alternative suppliers may impact equipment efficiency, centers may need to compromise in order to prioritize keeping operational costs low.
  • Equipment compatibility issues: Tariffs may make ensuring compatibility between certain platforms and AI-based technologies more complicated, especially as emerging chipsets enter the market. Data centers may need to spend more on essential servers and networking equipment to ensure seamless integration in their systems.
  • Regionalization: Data centers may become more concentrated in regions that are less impacted by the tariffs, which could create data fiefdoms and impact service delivery to remote areas.
  • Limited connection capacity: The power grid is already congested in many areas of the U.S., which has caused the amount of time needed to connect new campuses to increase by several years. Tariff-related supply chain disruptions can further impact a new data center’s connection by creating shortages of equipment needed to establish these connections.

Tariffs and Technology Industry Outlook Amid Rising Demand

Although supply chain disruptions and congested power grids are likely to raise capital and operating expenditures, data center experts predict consistent industry growth due to increased demand for:

  • Artificial intelligence (AI): AI is highly resource-intensive, and the Trump administration’s emphasis on promoting American dominance in the field will lead to ever-increasing demand for power and computing resources.
  • Cloud computing: Companies across various industries are increasingly shifting from legacy solutions to cloud-based software as a service (SaaS) applications, which will cause SaaS providers to increase colocation data center spending as they spin up resources.
  • Digital transformation: Demand for colocation and hyperscale data centers will continue to rise as companies migrate more workloads to the cloud. Data centers must establish a plan for sustainable scalability as the power grid becomes increasingly congested.

Key players in the data center industry have been developing strategies for proactively adjusting to the tariffs since the administration first proposed them. Identifying potential alternatives to current industry standards is one such solution.

Navigate Data Center Technology Challenges With Assistance From DataSpan

If you’re looking for solutions that will help your data center achieve computing goals while navigating supply chain issues, it’s best to work with experienced professionals. We’ll assess your current data center operations and provide expert guidance on the best solutions for achieving your goals.

Contact your nearest DataSpan representative for more information on how our experts can help your business develop custom technology solutions to withstand the potential chaos of impending tariffs.

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