How is tariff uncertainty impacting tech?

You’re tired of reading about tariffs. Honestly, we’re tired of writing about them. But amid the ever-shifting landscape of announcements, backtracks, court decisions, and Truth Social missives, where do things stand right now?

As part of Morning Brew’s Quarter Century Project, the Tech Brew team homed in on the ABCs of tech industries—automobiles, batteries, and chips—to illustrate how tariffs are impacting those sectors, the US economy, and your wallet.

Automobiles

What’s the latest with automotive tariffs? According to Art Wheaton, director of labor studies at Cornell University’s ILR School, the situation is “still as messy now as we were when we began.”

“There’s not a lot of clarity,” he told us late last month. “There is no final deal for Mexico. No final deal for Canada. There’s no final deal for China. So everything is still in flux for three of the biggest trading partners we have.”

In April, the Trump administration implemented tariffs of 25% on imported vehicles. Since then, the US has announced trade deals to lower auto tariff rates for several trading partners, including the UK, Japan, South Korea, and the EU.

“It’s really created a lot of confusion—which, if you ask the current administration, they like,” Wheaton said. “They like keeping everybody on their toes, but the auto industry hates uncertainty.”

In an August update on the auto tariffs landscape, Cox Automotive reported that “automakers have theoretically racked up more than $25 billion in tariff obligations so far,” based on “the average imported vehicle being charged roughly $5,200 at the US border.”

Overall, automakers and dealers appear to be absorbing at least some tariff-related costs rather than passing them on to consumers in full, according to Cox.

“But that won’t last,” Erin Keating, executive analyst at Cox, wrote. Cox analysts forecast a 4%–8% YoY increase in retail prices by the end of the year.

Meanwhile, auto manufacturers are feeling the effects on their bottom lines, with companies like General Motors, Ford, and Hyundai reporting tariff-related hits to profitability in Q2. The biggest US automakers reported that tariffs hurt their collective profitability to the tune of $11.7 billion in the second quarter, Yahoo Finance reported.

“The auto industry is clearly under pressure,” Keating wrote. “Tariffs are increasing costs across the board for automakers, dealers, and consumers—not only for new vehicles, but for aftermarket parts and insurance costs.”

Cox analysts expect the average transaction price of a new vehicle in the US to surpass $50,000 this year, and for new-vehicle sales to be lower than in 2024.

And affordability is already a challenge in the auto industry: Yahoo Finance cited Atlanta Fed data indicating that car prices are growing six to eight times faster than household incomes.

Experts have noted that some other recent federal policy changes, like the rollback of vehicle fuel efficiency standards, could be tailwinds for domestic automakers.

“GM, Ford, Stellantis, and others can now make as many pickup trucks and large SUVs as they want,” Wheaton said. “So they’re able to absorb some of those tariffs because they think their profits are going to do better with a different vehicle mix, much worse [mileage] per gallon but higher profit margin.”

Batteries

In the last few months, it’s felt like tariff uncertainty has taken a backseat to sunsetting clean energy tax credits in the green tech industry. But for battery manufacturers—which were able to keep their 45Y and 48E tax credits—the tariff war has hit hard, forcing them to make tough decisions about where they source their battery cells.

Rithy Chhean, VP of technology at BoxPower, told Tech Brew that “when the price war escalated, [tariffs] became all-consuming” for the company, which produces batteries in addition to solar powered microgrids. While portions of BoxPower’s hardware is domestically produced, the company—like many other battery manufacturers—uses battery cells from China.

“Over the course of three months, it went to almost a 150% tariff,” Chhean said. “We didn’t have special terms in our contracts to say, ‘Here’s the tariff costs, and if the tariffs increase, you have to pay it.’ Some customers were able to deal with it. Some customers, you’re not able to do anything. Someone has to pay that difference.”

BoxPower’s forthcoming LFP battery, the ABX‑110‑BABA, fulfills Build America, Buy America (BABA) requirements, meaning at least 65% of the battery's materials were produced in the US. Even so, Chhean said BoxPower wasn’t able to find any cost-competitive domestic battery cells to use in the product.

“It’s cheaper to get cells from basically another country and pay the tariff costs,” he told us. “Even the companies that say they’re highly domestic, we find out that their cells or modules are also coming from China anyway, or somewhere like China.”

Though the Trump administration claims the goal is to increase “advanced domestic manufacturing capacity” through tariffs, doing so will take time in the battery industry. Critical mineral developers are working together to surmount China’s dominance, and battery makers have plans to bring manufacturing plants to the US in the future, but right now companies like BoxPower are in a bind.

At the moment, Chhean said BoxPower uses a “hybrid approach.” The company still buys battery cells from China, but when possible, it buys from companies in other countries that have lower tariffs—even though the cost of the item might be higher. Above all, BoxPower says it’s working to be transparent about tariffs with customers.

“We’re trying to show what the tariff costs are,” Chhean said. “If the tariffs do increase, we will provide a very small markup, if any markup, on it because it’s not really fair to the customer, and we understand that.”

Chips

There’s plenty of uncertainty and confusion to go around, too, when it comes to Trump’s moves on semiconductors, which power everything from consumer electronics to advanced AI chips.

The president said in early August that he plans to levy 100% tariffs on semiconductors, a possibility his administration has been probing since April. But the announcement also contained a key exemption: Companies that have committed to investing in manufacturing in the US or are already doing so are not subject to the tariffs. The Trump administration has already named Apple as one of these companies. Some of the biggest players in the AI infrastructure boom—Nvidia, TSM—–may also be in the clear.

Much remains up in the air about the details of these tariffs, which have yet to be formally rolled out. The Semiconductor Industry Association said last month that “we are eager to learn more.”

In such an uncertain environment, Lydia Clougherty Jones, a senior director analyst with Gartner, said companies will likely need to consider multi-country sourcing strategies and stay nimble with scenario planning and analytics.

“It is critical to align technology procurement decisions with the highest-priority disruption-proofing needs, including enabling executive teams to use real-time situational analysis to prepare for future short-term and long-term trade war disruptions,” Clougherty Jones said in an email.

Meanwhile, Trump has also been taking a more active role in running the chipmaking industry itself, most notably by having the US government take a 10% stake in Intel. Trump is also directly negotiating fees with Nvidia and AMD to continue selling chips in China, in what legal critics say may be considered an unconstitutional export tax.

Clougherty Jones said the US government’s more active role in setting industrial policy for the chip sector could ultimately speed AI development—a goal for both the government and the companies involved—but they may also end up at odds over differing motivations.

“Such public-private partnerships prioritize speed, resulting in the acceleration of AI R&D and infrastructure build out, including of data centers, without regulatory guardrails, as governments can selectively remove barriers to AI progress or deprioritize their enforcement,” she said.

“On the other hand, there can be a clash of priorities, as private companies are driven by profit motives and the goal of delivering maximum returns to their shareholders, whereas governments may prioritize advancement of sovereign-specific goals such as national security and strategic AI autonomy, leading to dissimilar drivers and measurements of what successful AI advancement looks like,” she said.