The latest round of retaliatory tariffs announced by the US has drawn sharp reactions from analysts, who warn of significant consequences for the country’s technology sector and its position in the global artificial intelligence (AI) race.
Wedbush Securities analyst Dan Ives, in a client note issued Friday, criticized the policy direction, saying it could set back the US tech industry by a decade.
“The concept of taking the US back to the 1980s ‘manufacturing days’ with these tariffs is a bad science experiment that in the process will cause an economic Armageddon in our view and crush the tech trade, AI Revolution theme, and overall industry in the process,” he wrote.
US tech supply chain under threat?
The tariffs in question include a 50% levy on imports from China, 32% on Taiwan, and 46% on Vietnam — all of which are central to the global technology supply chain.
Ives warned that these measures risk cutting off access to critical manufacturing regions, thereby disrupting operations for US technology companies.
As an example, he pointed out that producing iPhones in the US rather than their current locations in China, Vietnam, and India would increase their price from roughly $1,000 to $3,500.
He also estimated that broader electronics prices for consumers could surge between 40% and 50%.
Ives expressed particular concern about the implications for the AI sector, stating that the current tariffs would significantly slow the momentum of the so-called AI Revolution.
The analyst added:
The economic pain that will be brought by these tariffs are hard to describe and can essentially take the US tech industry back a decade in the process while China steamrolls ahead.”
“The AI Revolution trade would be significantly slowed down by these head scratching tariffs that NEED to be negotiated to realistic levels.”
He further noted that any attempt to shift production back to the US would face long lead times and high costs.
“The cost of labor is unrealistic in the US to ever have semi fabs at scale,” Ives said, referring to semiconductor fabrication facilities.
He estimated that the current tariff structure could lower tech sector earnings by at around 15%.
US tech stocks fall off a cliff
The Nasdaq Composite was down around 3.5% on Friday, following a 6% decline the day before, as technology stocks with heavy exposure to China remained under pressure.
The index fell over 5% today to hit an intraday low of 17,514.97.
Apple dropped more than 3%, Nvidia declined 5%, and Tesla slid 6%.
All three have significant operations in China and are among the hardest hit by the country’s retaliatory tariffs.
The massive pain started on Thursday.
Technology stocks saw their worst day since the COVID-19 pandemic on Thursday.
Apple led the losses among the “Magnificent Seven,” falling more than 9% in its steepest decline since 2020.
The company manufactures its devices in China and other parts of Asia.
Meta Platforms and Amazon each dropped around 9%, while Nvidia fell nearly 8%.
Nvidia produces its latest chips in Taiwan and assembles its AI systems in Mexico.
Tesla lost more than 5%, and Microsoft and Alphabet declined about 2% and 4%, respectively.
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