TARIFF WARS AND A RESHAPING OF AI'S GLOBAL LANDSCAPE

There could be an impact on economic efficiency and innovation, but some countries could find themselves in a precarious, yet potentially advantageous, position

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ential election in the United States in 2024, renewed implementation of substantial tariffs could lead to a fundamental restructuring of global technology supply chains that power artificial intelligence (AI) development. While established players recalibrate, countries such as India are finding themselves in a precarious, yet potentially advantageous, position — as the "third option" in the technological rivalry between the U.S. and China.

The tariffs have raised the costs of imported components that are critical to AI infrastructure. In 2024, electronics imports to the U.S. alone were nearly $486 billion, with data processing machine imports costing around $200 billion, sourced largely from tariff-affected countries such as Mexico, Taiwan, China, and Vietnam. These tariffs risk making the U.S. the most expensive place in the world to build AI infrastructure, driving companies to relocate data centre construction abroad, ironically to China.

The first wave of the Trump tariffs, between 2018-20, resulted in a price increase for imported semiconductor components. The current tariff regime has expanded this to as high as 27% on critical AI hardware components in 2025, particularly affecting specialised AI accelerators and advanced logic chips, components that constitute the computational foundation.

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