Ben Barringer, global technology analyst at Quilter Cheviot, has shared his thoughts on the tariff announcements for semiconductors and technology.
“It was the tech sector’s turn to ride the tariff rollercoaster over the weekend, as first electronics were exempted on Saturday from the tariffs announced, only for the Trump administration to do a reverse ferret and say the exemption is only temporary and will be reviewed as part of proposed tariffs on semiconductors in the next month or so. Things are moving very quickly, so whether this is the settled position remains to be seen. As ever, in Donald Trump’s world the only certainty is uncertainty.
“Clearly, announcements like this will weigh heavily on tech companies until they get a much more obvious operating environment. The actual impact on earnings remains to be seen, but with the latest results season starting in earnest this week, every statement will be closely analysed to get a view on what tariffs will do to the bottom line, and crucially what other companies are doing with their IT spend. Somewhat perversely, we could actually see some earnings go up in the short-term as companies stockpile semiconductors and other tech equipment, but investors will want to see what is expected to happen over the course of this administration.
“There are some positives, however. Firstly, this confirms that technology and much of the Magnificent Seven will be treated differently when it comes to tariffs. While they may not get a full exemption, it does hopefully mean the impact will be lessoned. Secondly, investors are starting to be able to articulate the problems and dimension the real impact of different tariff rates may be. It is still like pinning the tail on donkey, but it is becoming much clearer to work out how exactly the likes of Apple and Nvidia will be impacted.
“Finally, we just have to look at the countries currently negotiating new trade deals to see how important technology is to the US. Trump may state he wants more semiconductors made in the US, but tech-heavy nations like Japan, South Korea and Taiwan appear to be in pole position to negotiate a deal. Given companies such as TSMC have devoted a lot of investment resource into the US, it is crucial that something is agreed before any future punitive tariffs kick in.”
