The technology sector, or at least a key part of it, breathed easier on Saturday after President Trump said that various industries, including semiconductors, computer hardware, and smartphones, would be exempt from the steep reciprocal tariffs put in place this month.
The reprieve, however, may only be temporary, according to Commerce Secretary Howard Lutnick.
Lutnick, a key proponent of tariffs to re-spark U.S. manufacturing, provided more insight into technology sector import taxes on Sunday. His message renews uncertainty for major U.S. technology companies, including Apple, Dell, and Nvidia, which depend heavily on overseas production to keep costs low.
Howard Lutnick, US commerce secretary, appeared to walk back exemptions from tariffs for technology companies on April 13.Bloomberg/Getty Images
Technology stocks gets hard hit by tariffs
The stock market's back-to-back 20% plus returns in 2023 and 2024 were largely driven by strength in America's biggest technology stocks. The so-called magnificent seven, comprising Apple, Microsoft, Amazon, Alphabet (Google), Meta Platforms (Facebook), Nvidia, and Tesla, were top performers, partly thanks to rising excitement over artificial intelligence.
After OpenAI's ChatGPT became the fastest app to reach one million users in 2022, big tech poured billions of dollars into training and operating its own large-language AI models, or AI chatbots, and agentic AI programs designed to complement and, in some cases, replace workers.
The research has been widespread, and AI is already making an impact.
Banks are using AI to manage risks, retailers are exploring its use in supply chains and to prevent theft, and manufacturers are evaluating its use to remove production bottlenecks. Even the military is in on the action, considering how it may provide an edge on the battlefield.
AI's rapid adoption has meant a significant refresh cycle across all technology infrastructures.
Central processing units deployed in enterprise and cloud networks, like those run by Google, Amazon, and Microsoft, are being replaced by graphic processing units (GPUs) made by Nvidia, better suited to handling the massive compute power necessary for AI development. Similarly, servers and computers are getting upgraded, boosting revenue for players like Dell and Super Micro.
In 2025, Microsoft, Meta Platforms, Google parent Alphabet, and Amazon plan to spend about $325 on the stuff necessary to run and grow their businesses, much of it on AI.
Those plans, however, could get rethought following tariffs that could increase expenses and slow the economy.
Reports are already circulating that Microsoft is slowing its data center plans. That trend may accelerate if higher prices caused by tariffs weaken the economy, leading to canceled orders.
The situation isn't limited to the impact on these businesses' AI plans, though. Tariffs risk increasing costs on laptops, smartphones, and flat-panel TVs, potentially causing everyday consumers to rethink upgrading existing electronics.
A potential slowing has led to a widespread sell-off in technology stocks. Particularly hard hit have been Nvidia and Apple, which are down 9% and 7%, respectively, this month alone. Overall, Roundhill's Magnificient Seven ETF MAGS is down 18% this year, including a 3.5% tumble this month.
Technology gets an exemption, but Lutnick casts doubt on tariff break
On Saturday, some technology investors' worry was removed when the administration provided guidance that popular electronics, including laptops, computers, semiconductors, TVs, and solar cells, are exempt from the reciprocal tariffs announced on Liberation Day, April 2.
The technology exemption includes imports valued at nearly $390 billion, including over $100 billion from China. An escalating trade war means the current tariffs on China's imports total 145%.
The exemption doesn't include a 20% China tariff announced before April 2. And it may not be long-lasting, given comments made on April 13 by Commerce Secretary Howard Lutnick.
Lutnick said on an ABC News interview that technology tariffs will be considered independently from reciprocal tariffs, and specific "sector" tariffs will soon be placed upon them.
"Sector tariffs will not be part of the negotiations," said Lutnick. "Virtually all semiconductors are made now in Taiwan and they're finished in China. It's important that we reshore them. And so the President is going to come out with his policies on semiconductors and pharmaceuticals. They're going to be outside the reciprocal tariffs."
Therefore, the sector will be treated similarly to autos, which are subject to a 25% tariff, and pharmaceuticals, which the White House says it will also target separately with tariffs.
Nevertheless, this weekend's mixed messages on technology tariffs are problematic for businesses that rely on policy certainty to make long-range plans.
Excluding these tech products from reciprocal tariffs "took doomsday scenario off the table," according to influential tech analyst Dan Ives on "X." "But still there is mass uncertainty, chaos, and confusion about the next steps."
