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China Tariff War Will Hurt Cloud Computing - and the Millions of Businesses and Consumers Who Use it

Sage Chandler, Vice President, International Trade , Consumer Technology Association
Data centers are a vital component of today’s connected economy and directly underpin the business model of many companies and industries. They make it possible for our farmers, manufacturers and other traditional businesses to evolve their operations for the future.

For example, farmers in Iowa and elsewhere are increasingly using smart devices and analyze software to work with and learn from virtual crops and ultimately increase their yields and efficiency. Cloud-based data centers store and process this data.

But we should be concerned about the implications tariffs have on the U.S. cloud computing industry and overall repercussions it has on consumers and the economy.

Tariffs on printed circuit board assemblies (HTS 8473.30.11) will directly increase the cost and difficulty of building data centers in the U.S. and raise costs for the small and large U.S. businesses that rely upon cloud services to export to global customers. American manufacturers of products that contain printed circuit assemblies, which are key to data centers, will face $900 million to $1.8 billion more in costs. Higher costs will likely be passed down until they reach the consumer. 

More, tariffs on connected devices will drive up the costs of U.S. companies that make connected devices and equipment, forcing some to send jobs overseas and increasing the costs that hundreds of millions of American consumers and businesses pay to use these devices. U.S. consumers should expect to spend as much as $3.2 billion more for any device that connects to another and the internet.

The impact of these taxes will extend far beyond the tech sector. Future U.S. economic growth in nearly every sector relies on internet innovations such as cloud computing. And U.S. cloud providers are among the strongest American exporters, supporting tens of thousands of high-paying American jobs and contributing on average $32.5 million annually in economic activity to local communities.

The uncertainty surrounding American trade policy and tariffs on Chinese goods presents unnecessary headwinds to economic growth. It is estimated ten or 25 percent tariffs will cost the economy between $520.8 million and $2.4 billion annually, respectively.

To summarize, sudden changes in costs through new tariffs would massively disrupt the construction of new data centers in the U.S. and hurt many small businesses trying to manufacture connected devices in the United States. Ultimately, putting a tax on U.S. consumers seeking to connect to the internet or use connected devices.

We urge you to contact the Trump administration today and share with them how the $200 billion round of tariffs negatively impacts your business. You have until Thursday, Sept. 6th to make your voice heard.