Technology industry pivots to cope with tariff uncertainty
Amid tariff tensions, the technology sector shows resilience and adaptability
Few industries are more exposed to global tariff tensions than technology. US technology companies depend on global supply chains for critical components such as semiconductors, memory chips, processors, and cables. Even when final assembly occurs domestically, core parts often originate from countries such as China, Taiwan, and South Korea—making the sector especially vulnerable to trade disruptions.
New sweeping US tariffs—announced by the Trump administration in April 20251 and now going into effect following rounds of negotiations—are expected to disrupt supply chains and increase manufacturing costs. To better understand the effects, KPMG LLP surveyed 300 C-suite executives, including 60 from the technology sector, in May 2025.2
Financial impacts and operational adjustments
So far, tariffs have had a limited financial impact on technology companies. More than one-fourth (28 percent) of technology respondents reported virtually no change in gross margins—consistent with other industries—while another 28 percent cited a modest decline of 1 percent to 5 percent. Despite ongoing global tariff tensions, most technology firms reported minimal sales disruption. Still, long-term uncertainty remains a concern as supply chains continue to shift.
Electronic components—classified as “intermediate goods”—were flagged by 24 percent of technology executives as particularly vulnerable. In addition, 18 percent said tariffs had affected corporate services like customer support—more than four times the rate in any other sector.
In response, many firms are reassessing supply chains, rerouting delivery channels, managing export restrictions, and recalibrating customer fulfillment strategies. These shifts are putting added strain on demand planning, customer support, and budgets tied to strategic priorities.
While cloud and services firms have seen minimal disruption, semiconductor and hardware companies are likely to remain focused on tariff developments in the months ahead.
Tech companies have weathered tariff pressures well so far, but shifting supply chains and long-term uncertainty remain front of mind for industry leaders.
Aditya Rath
Principal, Advisory • Line of Business, Technology, KPMG US
Sales impacts have also been relatively muted. Almost half (47 percent) of technology respondents said customer demand remained steady—slightly above the 45 percent reported across all sectors. However, 27 percent noted some sales were being deferred. On the international front, 37 percent reported no more than a 5 percent decline in foreign sales, and 30 percent saw no discernible drop—outperforming most other industries.
Investment and strategic responses
Technology executives are taking a cautious approach to investment. More than one-third (38 percent) said they’ve postponed or scaled back plans, with about one-third of those delaying by 7 to 12 months. Another third reported no changes to scheduled investments—higher than any other sector and above the 23 percent overall average.
In line with overall results, 47 percent of technology leaders said they would adjust export pricing, product mix, and positioning to address shifting demand for US exports..
Mitigation strategies
To mitigate tariff impacts, some technology companies are exploring manufacturing relocation to the United States—though the path is complex. Eleven percent of tech sector respondents said it would take more than three years to shift operations, twice the overall average. Still, 32 percent said onshoring is “somewhat feasible,” in line with other sectors.
Another tactic—used by 57 percent of tech firms—is passing up to 50 percent of tariff costs to customers (compared to 73 percent of companies overall). A modest 27 percent have absorbed all costs internally—still higher than in other sectors.
To increase agility, many companies are adopting data analytics and digital tools. About 40 percent of technology sector respondents agreed that better data collection and visibility would improve tariff response planning.
While technology companies must continue investing in research and development, some operational cuts are under consideration. Among respondents, 22 percent said they are weighing headcount reductions.
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Tariffs present serious challenges to the technology sector—but executives are preparing. By diversifying supply chains, leveraging data analytics, engaging in policy discussions, and forming strategic alliances, technology companies can mitigate risk and strengthen their global competitiveness.
2. The online survey of 300 U.S. based C-suite executives (including 60 from the technology sector) was conducted from May 22, 2025, to June 11, 2025.
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