While the semiconductor brains of artificial intelligence are so far exempt from tariffs, the materials used to build the massive sites where they are installed and operated are not. That’s a problem.
Donald Trump’s administration has gone all-in on AI: A day after his inauguration, the newly-elected president stood in the White House with OpenAI CEO Sam Altman, Softbank CEO Masayoshi Son and Oracle CEO Larry Ellison, announcing a massive $500 billion investment in AI infrastructure called Project Stargate. Weeks before that, Son joined Trump at Mar-A-Lago to tout a $100 billion investment in U.S. artificial intelligence. And during a global AI summit in Paris in February, Vice President J.D. Vance spoke about U.S. leadership in AI, insisting the administration “plans to keep it that way.”
But with sweeping tariffs announced earlier this week, the White House may be hamstringing the industry it has been so vocal about propping up. While the tariffs exclude semiconductors, the brains of computers and AI, they could drive up the costs of building and operating the vast data centers in which they are housed. Those facilities are crucial to powering the billions of computations that make artificial intelligence possible.
“The vast majority of imported goods that are needed for data centers are subject to these tariffs,” Jason Miller, a professor of supply chain management at Michigan State University, told Forbes. “In my mind, there is no doubt they will raise the cost structure for putting together data centers.”
While the industry could ramp up stateside manufacturing of aluminum and other materials crucial to data center construction, that will be both costly and time consuming — particularly for companies who didn’t have any of this on their roadmaps. And in the fast evolving world of AI, time and speed are crucial. Gavin Baker, chief investment officer at private equity firm Atreides Management, is blunt about what this means for the steep competition between China and the U.
