How Trump’s New Tariffs Could Increase AI Development Costs

AI-related stocks have been hit after U.S. President Donald Trump announced broad tariffs on foreign goods, signaling potential trouble for the industry. Major players in artificial intelligence are currently pouring massive amounts of money into building data centers to power and train AI systems.

According to analysts, the tariffs will push those already high costs even higher. AI servers and other datacenter gear are mostly imported. That includes essential infrastructure like cooling systems and power units, meaning the new tariffs will raise prices on many fronts. While chips themselves won’t be taxed if shipped as individual units, most arrive inside assembled products like servers, which aren’t exempt.

Author Chris Miller, who wrote Chip War, pointed out that this could significantly drive up the cost of setting up AI infrastructure in the U.S., at least until supply chains adjust. There’s concern this might cause American firms to move datacenter development to other countries where building is cheaper.

However, there is a small silver lining. Analyst Stacy Rasgon noted that Nvidia, a leading supplier of AI servers, builds many of its units in Mexico. Thanks to a free trade agreement, these servers may avoid tariffs entirely. That could cushion the blow for some companies.

Still, the bigger issue might not be hardware costs alone. Rasgon warned that if the trade war triggers a broader economic slowdown, tech giants spending heavily on AI—often called hyperscalers—could pull back. A recession would likely shrink ad revenue and reduce available capital, making large AI projects harder to sustain. He questioned the strategy behind the tariffs, calling them a “grenade” thrown into a delicate system.

The spike in construction and equipment prices could also weaken the U.S.’s competitive edge in the global AI race, especially against China. Miller warned that the added costs might delay or derail plans to expand datacenter capacity—something already considered a challenge.

Despite rising infrastructure expenses, experts say the cost of using AI is still dropping fast. Research from Epoch AI shows that the computing power needed for the same performance level is falling dramatically each year, thanks to smarter algorithms and better hardware. So, while building AI systems might cost more in the short term, using them could become cheaper for consumers.

In short, the tariffs risk raising barriers for U.S. AI development—both financially and strategically—even if the long-term impact remains uncertain.

Enterprises like Thumzup Media Corp. (NASDAQ: TZUP) that leverage AI solutions in their service suite will be hoping that the trade war doesn’t impose unjustifiable extra costs to their business model.

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