Dive Brief:

• Sweeping tariffs announced by President Donald Trump last week could drive up information technology prices and weaken global IT spending this year, according to research firm IDC.
• The tariffs have introduced “significant instability” into the IT market, IDC analysts said in a Friday report. The impact will unfold quickly despite the “strong countervailing force” of high demand for artificial intelligence and related technologies, the analysts wrote.
• “If the measures announced on April 2 stay in place and trigger an escalation of retaliatory measures leading to a global recession, the impact on IT spending will be swift and downward, potentially leading to the worst market performance since the great financial crisis of 2008-2009,” they said.

Dive Insight:

Global markets were plunged into turmoil last week after Trump imposed new levies on virtually all U.S. trading partners, including a 10% baseline tariff on all imports and reciprocal tariffs ranging as high as 34% for China.

Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia and Tesla — a group also known as the “Magnificent Seven” — collectively lost more than $1 trillion in Thursday trading on Wall Street, according to a CNBC article.

The damage could just be starting, according to analysts. If the tariffs stay in place, they are expected to trigger supply chain disruptions and inflationary challenges across various markets, including the IT sector.

Reciprocal tariffs could be “calamitous” to IT hardware companies like Apple, Morgan Stanley analysts said in a Thursday client’s note. Nearly all hardware products, including iPhones, sold into the U.S. are now subject to import tariffs of 25% to 54%, they said, estimating that Apple alone could see its annual sales impacted by as much as $33 billion.

Tariff costs hitting Apple and other IT companies “will likely be passed entirely to the end-customer,” the Morgan Stanley note said.

In a Saturday client’s note, Wedbush analysts said the latest tariffs could be “devastating” to Apple and its cost structure. “The tariff economic Armageddon unleashed by Trump is a complete disaster for Apple given its massive China production exposure,” according to the Wedbush note. “In our view, no US tech company is more negatively impacted by these tariffs than Apple with 90% of iPhones produced and assembled in China.”

More broadly, a weakening economy will lead to IT spending cuts and delays in the next six months, according to the IDC report. The research firm’s March 31 forecast of 10% growth for global IT spending in 2025 will be “reduced significantly” based on last week’s tariff announcements, IDC analysts said.

“While this impact will be most immediate in devices... and network hardware as well datacenter construction, even sectors such as software and services will be affected if tariffs are longer lived,” they said.