IDC warns US tariffs will impact tech sector spending

IDC has warned that the US government's sweeping tariffs could cut global IT spending in half over the next six months.

The research foundation said the new wave of trade tariffs will drive up technology prices, disrupt supply chains, and ultimately weaken global IT spending.

As a result, the organization said it was developing a 'downside scenario' that would reflect the possibility of a broader trade war with potential retaliatory measures from other countries.

The adjustment to a new baseline of slower growth was IDC's "new reality", it said. However, underlying demand for IT was still "high" and the likelihood of a decline in overall IT spend was low, IDC said.

"Our March 31 forecast of 10% growth for global IT spending will be reduced significantly in April, based on the tariff announcements of April 2," IDC explained in a blog post.

"The situation remains extremely fluid, and subject to new announcements or changes, but a weakening economy will lead to IT spending cuts and delays in the next six months. We will move closer to the previous downside of 5% growth, which reflects a rapid, negative impact on hardware and IT services spending."

IDC has also expressed growing concerns that it could lead to a broader economic slowdown with weaker investment by businesses and consumers. What's more, the impact is likely to unfold quickly as it could happen before any potential economic impact appears in data sheets, IDC said.

The consultancy suggested that agility would be key to navigating this period of uncertainty, warning that it could be several months of disruption before the full picture becomes clear.

US tariffs causing widespread unease

In the immediate aftermath of the tariff announcements, stock markets in the US and Asia dropped.

Companies like Meta, Nvidia, and Amazon saw stock prices fall around 5%. Apple reported a drop of 6% with the iPhone maker's products manufactured in the US, China, and India.

If the current measures announced on 2 April 2 stay in place and indeed trigger an escalation of retaliatory measures that lead to a global recession, IDC said the impact on IT spending will be swift and downward, potentially leading to the worst market performance since the 2008 financial crisis.

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