Technology sector pivots as tariff uncertainty deepens
Technology executives recalibrated investments, hiring, pricing, and supply chains as tariff pressures persisted from spring into early fall
The technology industry has been navigating a fluid tariff environment since last spring, when proposed US tariffs were expected to disrupt supply chains and raise costs. In May, KPMG LLP surveyed C-suite executives, including those from the technology sector, to establish an early baseline: many technology companies reported limited margin impact and relatively steady demand despite mounting uncertainty.1
By September, a follow-on pulse survey2 indicated where technology executives’ uncertainty had translated into more concrete actions—in capital spending plans, workforce decisions, sourcing strategies, and pricing moves—while still showing pockets of resilience in margins and sales performance.3 Together, the two snapshots show a sector adapting to prolonged volatility rather than reacting to a one-time shock.
What changed since May—and what held steady
Among respondents, 40 percent indicated that gross margins remained unchanged in September, and 10 percent saw an increase. Meanwhile, 37 percent anticipated a decrease in gross margins over the next 12 months, signaling caution even as current margins looked stable for many. In May, 28 percent reported no change, and another 28 percent cited a modest decline. The fall snapshot suggested near-term margin steadiness for more companies, but with a more guarded outlook.
In May, 47 percent said customer demand remained steady, while 27 percent noted some sales were being deferred. By September, 47 percent reported deferred sales—a continuation of the earlier trend—but 27 percent noted a decline, and only 10 percent saw an increase. This shift from steady demand in May to more deferrals and declines in September indicates that tariff uncertainty was having a more pronounced impact on sales.
Capital plans showed the clearest shift. In September, 60 percent postponed capital investments for up to 24 months, 27 percent made no changes, and 10 percent canceled investments. In May, 38 percent had postponed or scaled back plans and about one-third reported no changes. The fall data pointed to broader and longer deferrals as tariff uncertainty persisted.
Selected head-to-head indicators, technology sector, May vs. September
Sentiment also darkened. In September, 57 percent of respondents were doubtful or insecure about the stability of current US tariff levels, and 63 percent reported a negative view of the trade and tariff environment. May’s narrative acknowledged uncertainty but emphasized limited disruption; the fall pulse captured more explicit concern.
Cost impacts and trade flows: Pressure points clarified
Mexico, China, and Europe were the top import sources. Most technology executives reported a 16 percent to 25 percent increase in import costs from China, while a majority importing from Mexico and Europe saw a 6 percent to 15 percent increase. On the export side, Europe, Canada, and Mexico were the top destinations. Among those exporting to Mexico, results were split between decreases of more than 10 percent and increases of 1 percent to 10 percent, illustrating market-specific volatility.
Intermediate goods and imported finished goods were the most affected foreign operations, aligning with earlier findings that electronic components were particularly vulnerable.
Investment posture: Longer pauses, selective re-tilts to the US
Technology respondents were more likely than other sectors to increase investment in domestic markets, with 48 percent indicating plans to do so. Compared with May’s 38 percent postponing or scaling back, the September pulse showed longer and more widespread pauses, even as some funds tilted toward the US.
Pricing, pass-through, and commercial moves
Profit protection drove pricing decisions. Forty-seven percent changed prices to reach margin neutrality or breakeven, 37 percent adjusted prices for the full tariff impact, and 57 percent planned to increase prices up to 15 percent over the next six months. In parallel, 47 percent passed on up to half of tariff costs to customers, and 33 percent explored changes to business models, such as shifting from CapEx to OpEx.
Risk management and AI
Risk practices have matured. Among our technology sector respondents, 50 percent used real-time monitoring of trade and tariff developments, and 47 percent used scenario planning. Of the executives surveyed, 57 percent said their organizations were prepared to respond to new tariff changes, while 23 percent felt unprepared.
AI-driven inventory optimization was used by 47 percent of respondents. Most used AI for pricing and cost modeling (60 percent) and for forecasting and scenario planning (57 percent). Nearly half said generative AI would be integral to tariff response and trade strategy, while 40 percent expected to use it in the same manner as today.
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Technology companies did not wait for clarity. Respondents reported methodical adjustments to pricing, CapEx timing, supplier networks, and talent plans to navigate a tariff regime that remained unpredictable. The May snapshot captured initial steadiness; the September pulse reflected deeper caution—especially in capital and hiring—alongside intensified sourcing, risk management, and growing reliance on data and AI to stay ahead of policy shifts.
As we navigate the complex landscape of tariffs and trade disruption, it's clear that the technology sector is taking a cautious approach. Among tech leaders surveyed, 60 percent indicated they are postponing capital investments for up to 24 months. To help mitigate the uncertainty, 47 percent report using AI-driven strategies to optimize their operations.
Chad Seiler
Line of Business Leader, Technology, Media and Telecommunications, KPMG US
1 https://kpmg.com/us/en/articles/2025/technology-industry-pivots-tariff-uncertainty.html
2 In September 2025, KPMG surveyed 300 US C-suite executives in various functions about their views on the proposed US tariffs and their effect on their company and industry. Of the total surveyed, 30 were in the technology sector.
3 Ibid
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