Big Tech’s Three Underappreciated Risks Following a Week of Tariff Unease
In a trade war over goods, can you strike back at services?
Tariff chaos has unsettled big tech. As the Trump administration waffled on its policies this week, Apple loaded 600 tons of iPhones onto cargo flights and rushed them to the United States. Amazon CEO Andy Jassy said the company made “strategic forward inventory buys.” And Google Cloud CEO Thomas Kurian spoke of longstanding contingency plans in the face of global supply disruption. Meanwhile, analysts slashed forecasts and tech stocks whipsawed.
Whether the tariffs stick or not, there’s clear persistent risk for Big Tech, much of it underappreciated. The obvious threats are clear: the tech giants may face slowing demand for consumer devices like smartphones as prices rise, companies pausing expansion plans might hamper cloud growth, and brands importing products from overseas might slow ad spending. Less obvious, but perhaps more important, is the globe zeroing in on Big Tech as a vector of retaliation, bringing services into a trade war over goods.
Here are the three big underappreciated risks that will likely hang around even if the U.S. cancels the tariffs:
A Big Tech Tariff
Europe has a long history of fining Big Tech, but after the U.S. tariff action over the past week it’s considering more drastic action, like a broad big tech tariff. “You could put a levy on the advertising revenues of digital services,” European Commission president Ursula von der Leyen told the Financial Times on Thursday, suggesting a bloc-wide tariff vs. individual state sales taxes.
The U.S. and Europe have played chicken with tariffs on goods this week, but a bloc-wide levy on big tech revenue would be something unprecedented: A direct hit against the services-based powerhouse of the U.S. economy. And even if the current imbroglio settles down, the idea is now in play. Von der Leyen told the FT that this moment is “a complete inflection point in global trade,” and added “we will never go back any more to the status quo.”
A Retreat From U.S. AI Models
The United States is the leader in generative AI, with top foundation model providers Anthropic, Google, Meta, and OpenAI all headquartered in California. But unlike other recent technological revolutions, its advantage is fragile. China’s DeepSeek and fellow open source model builders have capitalized on the same underlying technology breakthroughs and are approaching the state of the art.
Should countries begin to distrust the U.S. as a reliable trade partner, they could choose to build on models developed outside of the United States, directing the momentum of today’s biggest tech breakthrough elsewhere. “The question is whose AI are people going to build on,” Jonathan Kanter, the former U.S. Assistant Attorney General for the Antitrust, told CNBC on Wednesday. “I’m really worried that we’re going to see Europe and other countries welcome China’s tech more than ours, and that can have a significant negative impact on our economy.”
Techmeme Ride Home’s Brian McCullough joined Big Technology Podcast recently to discuss this issue, you can listen on Apple Podcasts, Spotify, or your podcast app of choice.
Weakened Global Intellectual Property Protection
International cooperation has helped build norms where countries enforce IP rights globally. China hasn’t been a standout partner for the U.S. in this regard, but the country — where copying competitor tech is standard — specifically called out IP protection as a benefit the U.S. has received due to its cooperation with China.
“Imagine if China just made copies of Microsoft Word and started selling it around the world for five dollars,” said investor David Friedberg on The All In Podcast last week. “Now imagine if they started taking all of American manufacturing, drawings, blueprints, designs, and they have all this manufacturing capacity, and they sold everything at ten cents on the dollar.”
Bottom Line
Much of this risk sounds implausible today, but as trade wars escalate there are always unintended consequences. Of course, there’s a good deal of posturing and at least a decent probability things return to normal. But even if tariffs disappear tomorrow, the shift toward viewing Big Tech as a geopolitical bargaining chip is underway.
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Is AGI Close? What the ARC-AGI Test Actually Tells Us
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AI research firms keep telling us AGI is around the corner, and they’ve pointed to their improving performance on the ARC-AGI tests as evidence.
OpenAI’s o3 model, for instance, scored 75.7% on the ARC-AGI-1 test last year, a mark the foundation behind the prize called “a remarkable achievement” and a once-unthinkable milestone.
But what exactly is the test? And is high performance on this benchmark an indication that AGI is approaching?