Writer: Jordan Sprogis
Editor: Lillian Castro
Reviewer: Cristian Lopez
- President Trump’s announcement on tariffs, which went into motion on February 1, can raise consumer costs and disrupt supply chains »
- Companies must consider cybersecurity risks as they’re forced to change suppliers and rely more on open-source software »
President Trump confirmed plans to impose tariffs on U.S.-imported items, with a 25% tariff on Canada and a 10% tariff on China, which became effective on February 1. There’s also talk of imposing 25% to 100% tariffs on Taiwan.
The world saw the stock market’s reaction: the Dow Jones Industrial Average fell by 1.25%, the S&P 500 by 1.5%, and the Nasdaq by 2%.
Originally, President Trump planned to impose a 25% tariff on Mexico, but as of Monday morning, February 3, he announced he is holding off for another month.
“We’re thinking in terms of 25% on Mexico and Canada because they’re allowing vast numbers of people to come in [to the U.S.],” said President Trump on January 20 in the Oval Office. “We’re talking about a tariff of 10% on China, based on the fact that they’re sending fentanyl to Mexico and Canada.”
As part of a larger plan to reinvest in America and keep borders tight, President Trump has been discussing tariffs for a long time. The core of the action plan is to make imported goods more expensive to encourage domestic production.
His proposals for tariffs have, up until now, been generally broad. Now, we know what we are most likely looking at:
- Steel, aluminum, and copper
- Semiconductors and computer chips
- Pharmaceuticals
- Consumer goods
- Food items
“It’s time for the United States to return to the system that made us richer and more powerful than ever before,” said President Trump.
In the meantime, Congressman Riley Moore reintroduced the U.S. Reciprocal Trade Act on Friday, January 31. If passed, the act would give President Trump the power to negotiate lower tariffs on U.S. exports and impose higher tariffs on imported goods.
Consequences for Suppliers and Consumers
An Alcoa spokesperson warned that a 25% tariff on Canadian exports to the U.S. could add an estimated $1.5 to $2 billion in annual costs for American consumers.
For the tech and manufacturing sectors, this spells bad news. Higher tariffs will undoubtedly increase the cost of raw materials and components, which will impact not only the consumers but also major companies like Nvidia, Apple, and AMD. These high-scale tech companies rely on imported tech components, such as microchips, particularly from Taiwan.
In fact, Taiwan produces around 90% of the world’s most advanced semiconductors. In 2023, the U.S. imported 44.2% of its logic chips and 24.4% of its memory chips from Taiwan alone.
If the tariffs go into effect, it’s likely only a matter of time before there’s a temporary shortage of materials, causing the cost of everyday products to skyrocket until the demand is met again.
How that demand is met depends entirely on how fast manufacturers can pivot to U.S.-based suppliers and vendors.
Understanding Potential Supply Chain Risks
Shifting supply chains creates both economic and security risks. Finding new vendors and production locations, and even changing shipping routes have the potential to introduce cybersecurity threats.
The issue has become even more pressing as the use of generative and agentic AI grows. Manufacturing leaders have already started incorporating AI to improve supply chain visibility and logistics.
Another consideration is the type of software supply chains may be interested in — such as open-source software. Open-source software already plays a major role in the American supply chain, with an estimated 70% to 90% of any given software package containing open-source components.
Changing suppliers could lead to using unvetted open-source tools without realizing it, which creates a gap when there’s no vendor to hold accountable if issues arise.
Finding the Right Balance
As thousands of American manufacturers and companies sit in limbo, many are forced to ask how to balance changing suppliers while keeping control over their supply chains.
Experts say there is no single solution, especially since different industries face various challenges. Some sectors — such as healthcare which is typically guarded by strict regulations and legacy systems that make integrating with new technologies more difficult — have less flexibility than others.
Some industries are also more prone to security breaches that can result in catastrophic consequences, like finance. Security tools can help keep them in line.
No matter what happens to the American supply chain system, visibility is security. It brings us full circle — the theme of visibility has been integral to President Trump’s second term, with it essentially serving as the driving force behind the recent emphasis on national security and economic stability.
