President Donald Trump’s New Tariffs Create Nearly $1 Trillion “Trade Wall”
President Donald Trump’s new tariffs have created what trade experts describe as nearly a $1 trillion “trade wall.” Based on estimates using tariff costs paid in 2024, large U.S. tech companies could face daily fees ranging from $1 billion to $2 billion.
The new tariff policy is estimated to cost U.S. businesses $654 billion annually. Under the International Emergency Economic Powers Act (IEPA) and Section 232 of products like steel, aluminum, and automobiles, this figure is expected to rise further.
Josh Teitelbaum, former Deputy Assistant Secretary of Commerce during the Obama administration, stated, “If this goes to court, we are awakening a new global economy whose costs are different from what we have known over the past few decades.”
Large Tech Companies May Suffer
Since Thursday in 2020, the U.S. stock market has experienced its most severe losses daily. The effects have reached beyond Apple in the tech sector. The company has seen its worst stock drop since the outbreak of Covid-19. While Apple is particularly vulnerable due to its heavy reliance on Asian manufacturing, the new tariff framework has placed the entire tech industry’s trade surplus under scrutiny.
Professor Cesar Hidalgo from the Toulouse School of Economics stated that tech giants have long benefited from substantial trade surpluses with the rest of the world. Alphabet exported $141 billion in services, followed by Meta at $71.2 billion, Oracle at $45.2 billion, Amazon at $40.2 billion, IBM at $31.9 billion, and Microsoft at $31.6 billion.
Apple stock price. Source: Google Finance.
The U.S. exported $2 trillion in physical goods in 2024 while importing approximately $3.27 trillion. On the surface, this indicates a trade deficit of about $1 trillion. However, the digital economy is different. Whenever foreigners stream movies on Netflix or purchase ads on Facebook, the U.S. effectively exports its digital services. Hidalgo explained, “We estimate that the U.S. has a trade surplus of at least $600 billion in digital products.”
U.S. exports in digital advertising and cloud computing reached approximately $260 billion and $184 billion, respectively. Hidalgo noted that these figures are even larger than those for crude oil or refined oil exports, which have long been considered one of the country’s major exports.
Trade retaliation, however, may not be limited to digital services. Assistant Professor Jason Miller from Michigan State University warned that massive foreign countermeasures could be in play. This means that U.S. exports in tech sectors like aerospace, machinery, electrical equipment, computers, and electronics could face significant tariff-based retaliation.
Can Big Tech Actually Benefit from the Trade War?
The trade war also raises questions about whether large tech companies might ultimately benefit from the administration’s aggressive strategies. As Wall Street panics and global allies express their discontent, the consequences of Trump’s trade policies continue to grow.
If Trump can successfully negotiate better terms, some of the world’s wealthiest companies might see gains. Issues ranging from selling TikTok to digital services taxes, and even antitrust actions against Silicon Valley giants, have now become part of a broader trade dispute.
However, the question remains – what exactly does Trump want in exchange for these tariffs? Michael Froman from the Council on Foreign Relations addressed this on the Politico Tech podcast. Froman stated, “Leverage is only good when you take it out of the drive,” emphasizing that the government must clearly outline what it expects in return from other countries.
He explained, “You have to be able to pave the way for other markets in other countries.” He pointed out that, so far, the Trump administration has not provided a detailed plan outlining these demands.
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