IT Leaders Brace for Tariff Fallout on Infrastructure and Cloud Costs
The talk of the town these days — in any town — is tariffs. In early February, President Trump’s first slew of new tariffs went into effect: 10% on all Chinese goods. A 25% tariff on all Canadian and Mexican goods is expected to take effect in early April, along with 25% tariffs on all steel and aluminum, potentially by mid-April.
It’s hard to know what’s next and how this will play out exactly, but economists and industry experts predict that most or all these costs will be passed on directly to buyers. This is troubling news for U.S. companies that rely on electronics and materials from across the globe to source technology products, build facilities (like data centers), and arm their workforces with the best productivity tools to compete.
This may partly explain why Gartner’s IT spending forecast for 2025 is nearly 10% higher than 2024. “While budgets for CIOs are increasing, a significant portion will merely offset price increases within their recurrent spending,” said John-David Lovelock, distinguished VP analyst at Gartner.
So now what? Unlike consumers, CIOs can’t easily stockpile high-ticket items like servers, storage devices, and networking equipment — although there may be an argument for PCs. Some organizations embarked on this effort late last year as the incoming Trump Administration laid its vision for correcting the purported trade imbalance.
Further, cost efficiency has been a mandate from above for several years; asking the CEO for another $2 million to prepare your IT infrastructure and operations for tariffs may not play well. Many organizations struggle to fund critical initiatives like expanding cybersecurity protection and deploying AI. With costs increasing for basic infrastructure, they are now hard pressed to squeeze in these new priorities.
Other strategies may come into play now:
- Accelerate technology modernization initiatives. If you have plans over the next 12–24 months to replace an aging and legacy infrastructure stack, such as adopting HCI or higher-performing Flash storage, can you do so at a faster clip and leverage existing prices before they go up by 20–30%? For instance, you can delay spending on non-essential hires or expanding in the cloud to move the dollars around. IT leaders might be able to pitch emergency budget increases to avoid massive surcharges on expected purchases later this year or next.
- Re-evaluate cloud storage. While the major cloud companies (AWS, Google, and Azure) manufacture some of their hardware, they still rely on global supply chains to source the computing, networking, and storage equipment and components that power their data centers and services. Yet the cloud giants can absorb tariff changes more quickly than the average enterprise, whether through negotiations, volume discounts, or other workarounds. Cloud repatriations have risen in recent years due to high costs and mismanagement. Still, savvy IT leaders may now take a closer look at cloud infrastructure as a more cost-effective alternative to buying data center products that are 20–30% more expensive.
- Attain holistic visibility on unstructured data. When IT managers discover that they need more storage, the traditional response has been to procure more capacity. However, this may lead to waste or the use of the wrong storage technology later. Most (80%) of the data is rarely accessed (cold), yet it consumes expensive storage and backup resources. By gathering insights on all data across storage, IT gets insights on usage, growth patterns, data types, and costs to make the right decisions. Managing data across its lifecycle will always be more cost-effective in any market by right-placing data into the optimal storage for its current requirements.
- Choose best of breed. IT organizations with just a few large IT vendors running their stack is not uncommon, as the giants continually expand their offerings to meet new needs of customers. But this may not be the most brilliant tactic in times of supply-chain pressure, such as today. Having many vendors means they will work for your business and compete harder on pricing. This strategy may also give you the best cost and performance ratio for different workloads with some protection against a vendor raising its prices substantially or discontinuing an essential product.
- Prolong the life of your infrastructure using software. Since new infrastructure costs more for equivalent functionality, it’s wise to see how you can delay hardware refresh cycles by getting more value from existing infrastructure. For instance, you can leverage your older, slower storage infrastructure as a cold tier for high-performing storage. Using data management software to transparently tier cold files frees up expensive storage capacity while shrinking backup storage requirements.
- Keep the future in mind. A cautionary note: IT leaders must always retain a strategic outlook despite growing concerns about tariff-induced inflation. Making the best decisions for the business amid cost pressures should balance the need to develop an AI-ready infrastructure, secure across all areas with strong ransomware defenses, compliant with ever-changing global regulations, sustainable regarding energy constraints, and flexible enough to adapt to evolving business demands quickly. Data strategies will remain center stage, regardless of the technology you buy. Ensure you make your data AI-ready with proper data analytics and classification, as this is a first step for any AI data pipeline.
