Escape key: Why Trump changed his mind about tech tariffs

Good rules don’t need to be changed too much. But former President Trump has been changing his trade rules a lot lately, especially with China, and it’s been causing problems for the U.S. economy.

Between April 2 and April 9, Trump made three big changes to tariffs (extra taxes on things the U.S. buys from other countries). These changes confused investors and made U.S. stock and bond markets shaky. Then, on April 5, Trump took a big step back: he said the U.S. won’t charge extra tariffs on many tech products like smartphones, computers, and memory cards—for now.

Why the sudden change? Because the U.S. buys a lot of these products from China. Last year, phones and computers were the biggest items the U.S. imported from China, adding up to $88 billion. Nearly 40% of smartphones and 1 in 3 computers sold in the U.S. come from China. Unlike toys or plastic chairs (yes, the U.S. buys $8 billion worth of Chinese chairs!), phones and computers are hard to replace. There aren’t many other countries that can make them as quickly or in large numbers.

Also, adding tariffs to phones would hurt American companies like Apple. Most iPhones are made in China, and if they got more expensive, people might switch to Samsung phones, which are made in places like Vietnam and India.

So, this change is good news for tech companies like Apple, Google, Amazon, and Meta. These companies plan to spend a lot of money (over $300 billion!) on AI and data centers this year. Big projects like “Stargate” (an AI project worth $500 billion) also need new tech equipment. If the U.S. adds new taxes on tech gear, it could slow all of that down—and help China catch up in the tech race.

India tried something similar in 2023, by making it harder to import tech, but they quickly changed their mind too. And while the U.S. is trying to block some people from moving in, like Indian engineers, India has actually gained from that. A lot of high-tech jobs moved to India because of it.

If Trump wants the U.S. to stay ahead in technology, he’ll need to stop adding these tariffs and let tech grow without walls in the way.