Trump, Tariffs, and Telecom

Nearly the whole world is reacting right now to Trump's announcement of sweeping tariffs across a host of countries. Capricious and fast-changing tariff news may seem like the new normal, but this tariff action could have global economic consequences, depending on where this goes.

How will the telecom industry be affected by tariffs?

The good news

Telecom probably doesn't to panic at the same levels as, say, the apparel sector, because of the nature of the industry. 

"A silver lining for telecoms is that it should be well insulated from the worst of this move thanks to the inherently localised nature of the business," wrote Scott Bicheno at telecoms.com.  "Operators largely sell communications services within national borders so their core business is not directly affected by tariffs."

Investor Olaf Swantee isn't too concerned for the time being, particular in European markets. "The good news for telecom companies is that they have not been directly affected so far, and many European operators are protected to some extent by the way they are set up," he wrote on LinkedIn.

The bad news

With just a little bit of thinking, it's not hard to start pondering all the ways the telecom industry may be adversely affected by these tariffs.

First, there's the simple fact that high prices and hard times are never good for consumer spending. Sure, we all need the internet, but depending on how this all goes, consumers may be faced with difficult decisions and may have to make sacrifices. That goes for SMBs, too, who may be tightening their belts.

Getting more specific, telecom equipment vendors, and manufacturers and buyers of all sorts of components, will have to manage their partnerships with an eye to diversifying and planning for unpredictability.

"Rather than being hostage to single-source arrangements, look to qualify multiple network and IT vendors in different locations wherever possible so you have a backup if one or more sources are cut off," writes Swantee.

If you're a telecom provider or company you're also a part of the greater Big Tech ecosystem. Telecom is counting on innovations such as AI to account for the growth of bandwidth demand. Tech companies need components such as GPUs to enable the technology.

Matt Mittelsteadt from the Cato Institute believes technology as a whole should be concerned. "These massive tax hikes are slamming during the exact window U.S. industry has to set the global standard—risking innovation and ceding the market."