From Morningstar: 2025-04-04 05:46:00

On April 2, US President Donald Trump announced wide-ranging tariffs that will impact countries globally. Technology stocks, particularly those with hardware exposure, were hit hard in the aftermath. Hardware supply chains are primarily located in Asia and will face immediate challenges due to increased costs from tariffs.

The current tariff regime affects hardware supply chains in countries like China, Taiwan, South Korea, Japan, Singapore, Malaysia, Thailand, and the Philippines. While supply chains are global, there are limited options to avoid the impact of tariffs, except for potentially bringing manufacturing back to the US, which is unlikely and costly.

Semiconductors are currently exempt from tariffs, while only hard goods are being targeted. This means services in the technology sector, such as software, consulting, and IT services, are not directly affected. However, there is an increased risk of retaliations targeting services as the US is a net exporter of services.

Maintaining fair value estimates and Uncertainty Ratings across most of the tech sector, but there are heightened uncertainties and risks due to tariffs. Hardware companies with cyclical end market exposure, like autos and industrials, are most vulnerable. Retaliations from other countries could target US services, posing additional risks to the sector.



Read more at Morningstar: Big Tech Supply Chains Hit by Tariffs, Services…