Bytes: Week in Review — How tariffs impact consumer gadgets, e-commerce and the AI boom
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Can artificial intelligence outsmart tariffs? From American Public Media, this is Marketplace Tech. I'm Megan McCarty Carino.

The tariff roller coaster has created a lot of uncertainty in the tech industry. We're digging into how it's playing out for makers of consumer tech, e-commerce platforms, and AI in today's Marketplace Tech Bytes Week in Review. We're joined by Paresh Dave, senior writer at Wired, to help us dissect all this, starting with what it means for the device economy.

Some gadgets, 20, 40, 50% of the stuff inside is still subject to these tariffs. I mean, that's significant. So you're seeing companies start to say, we're evaluating what to do. A couple have even gone forward with, you know,

pausing things in terms of offering stuff for sale. I don't think we've seen a ton of price hikes yet, but Wired reached out, my colleagues, to over 70 brands and most of them said they were still evaluating things.

Well, we've been hearing a lot about Apple, of course, which is highly reliant on China, though it has diversified its supply chain a lot in recent years. But let's take a look at a different example, which kind of exemplifies what all this uncertainty is doing to consumer electronics. And that is the Nintendo Switch 2. We got a clip here. The Nintendo Switch 2 system can adapt to suit your situation.

So Nintendo was set to start taking pre-orders on these devices in the U.S. on April 9th, but the company delayed that in the wake of the kind of original tariff announcements last week. A good portion of these consoles are manufactured in Vietnam, some in China, some in Cambodia. The immediate pressure is, of course, off some of those countries. But, I mean, Paresh, what is...

this situation sort of show us about the kind of disruption and uncertainty that's affecting device makers? I think it shows that companies don't believe that these tariffs are around for good, that they believe things might ease off and go back to normal in a few months. Right. So by delaying bringing these devices into the U.S., by

by trying not to charge now. They're saying, we don't know where this is going. Maybe things will ease off. Maybe things will get worse and these tariffs will even go higher and you don't want to get stuck charging a lower price now and then having to eat the cost later.

I think in the case of Nintendo, they paused taking pre-orders and delayed that, but they have not delayed their launch window as of now. The expectation is still that the Switch will launch in June. They haven't said anything about that. But it just shows that they know this is sort of a negotiating tactic on Trump's part. Let's see how those negotiations go before we really try to push consumers to buy our stuff.

We'll be right back. You're listening to Marketplace Tech. I'm Megan McCarty Carino. We're back with Paresh Dave, senior writer at Wired.

Let's talk about some of the platforms that sell stuff, especially e-commerce platforms that are either totally or very highly reliant on these very low cost goods from China. They're now subject to these enormous tariffs. Shein, Timu, Amazon. How could tariffs on China affect these retailers? So the ability.

ability of these companies to send stuff to the U.S. is reliant on this sort of loophole in the postal code that allows them to send goods for really low shipping prices without sort of being subject to tariffs. Trump is taking that away, basically tripling the postal rates or subjecting them to sort of big

big tariffs. So, you know, your $2 shirt suddenly becomes maybe an $8 shirt, $12 shirt that's less interesting for people. And the expectation is that it's going to benefit retailers like Amazon.

that could ship goods through their own system aren't reliant on this sort of postal loophole. And there's a lot of retailers like Forever 21 that is happy that this loophole is closing, at least for now. We'll see if Trump changes it again.

Yeah, we've already seen Amazon kind of making some moves. Bloomberg reported that it had canceled a number of orders from manufacturers in China. Amazon kind of has the opportunity to go with manufacturers in other countries. But I mean, what about these retailers like Shein and Timu that are almost completely, you know, reliant on Chinese manufacturers on sending goods from China? I mean, what's going to happen to them?

I mean, I could also imagine that it's not just raising prices, but we could see shrink inflation, right? They sell clothes. You can't really shrink clothes, you know, sizes are sizes, but you could see less options. That's one thing that's, that there's an expectation that, you know, maybe,

there's not as many colors, maybe there's not as many sizes. In the case of actual goods, I notice every day my juice carton at the store gets smaller and smaller and the price stays the same. So you could see that with consumer goods too, even gadgets, right? Maybe the latest iPhone has the same amount of memory as last year's iPhone. And if you really want more memory, you have to pay a lot more for it. So

I think, you know, these retailers like Timu and Chien could survive by basically shifting what kind of products that they are selling. All right. Now let's move on to the technology that has been driving the whole industry, and that is AI. There's no tariffs on software, of course. There's no tariffs on semiconductors, which are essential to the AI industry. But are AI investments totally safe here, Paresh?

I would say in many ways they are, right? If companies are trying to survive this sort of tariff shock, if they are trying to find ways to cut costs and sort of maintain their profit margins, AI holds a lot of promise still. And I think as long as switching sort of

back office processes to AI, switching customer service to AI, as long as that saves more money than hiring more humans, I think we're going to see companies continue to be excited by AI. There's been a lot made of like Microsoft pausing data center construction in a couple places like Wisconsin and Ohio and elsewhere. You know, I'm not

so certain that that's about sort of tariffs and AI demand and the economy changing. I think it's, don't read too much into that, but I think it's more about Microsoft's relationship with open AI changing and, you know, Microsoft and open AI becoming more like frenemies and less like close partners. So, you know, I think there's a lot of reason to still be bullish on AI and, and,

the companies involved in it getting past the tariffs. Right. There's been a lot of questions about kind of the cost of building data centers with Microsoft maybe being, you know, exhibit A in that, although they announced that they were slowing down these building projects like well before the tariffs were announced. There are pretty much every hyperscale or, you know, company has these massive capital expenditures planned. I think it's like

nearly a trillion dollars committed to building data centers. Like anything else, you know, commercial building, residential building, I think the tariffs can affect raw materials here. But it sounds like, you know, from your point of view, it sounds like the demand is going to be so strong that it will kind of overcome any of those tariff speed bumps that we might see.

Absolutely. And companies buy so much in advance, especially companies like Google. They prepare in advance for this data center construction. There's been, since the pandemic, since the AI explosion, a lot of delays in getting parts. But you could imagine that they've put in a lot of orders at set pricing, probably discounted pricing. They can absorb some of these costs if tariffs hit semiconductors. They can absorb some of those costs.

What they can potentially absorb is if the EU or other places follow through with some of these discussions to put retaliatory tariffs on services. You said, you know, at the outside of your question, like there's no tariffs on services or software, but imagine if there was, that would release through these companies. And there has been talk of some sort of, you know, areas like the European Union potentially retaliating with that. And I think that would be a big scare for tech giants here.

That was Paresh Dave at Wired. You can find the full video of this episode of Marketplace Tech Bytes Week in Review on our YouTube channel, Marketplace APM. And subscribe if you haven't already to watch us every Friday. Jesus Alvarado produced this episode. Daniel Shin also produces our show. Gary O'Keefe and Jay Sebold are our engineers. Daisy Palacios is the senior producer. Kelly Silvera is our executive producer. I'm Megan McCarty Carino, and that's Marketplace Tech.

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