r/technology • u/DontFearTheCreaper • 20h ago

Social Media Tech CEOs who grinned behind Trump at inauguration lose billions in wake of tariffs

https://www.independent.co.uk/news/world/americas/us-politics/trump-tariff-bezos-musk-zuckerberg-b2727147.html
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u/juwisan 20h ago

Oh but then they will end up exactly there. They are completely out of ideas. These companies are shells of their former self. They print money off platform business models. They don’t need to innovate and they don’t. Money spent on buybacks is money not spent on innovating. I mean, sure, they may seem far ahead of the competition now. But if they don’t innovate it’s almost certain that this won’t be the case forever and then, from the comfort position they wane themselves in they may very well deliver too little, too late.

Just look at what happened to Nokia or BlackBerry or what is happening to Intel right now.

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u/thekrone 19h ago edited 19h ago

As long as the tariffs are in place, they don't really need to innovate (in a lot of sectors anyway). US-based companies will have their competition effectively slashed by 90-100%. Customers will be forced to buy whatever they can afford.

For example, the Big Three US auto manufacturers will no longer need to compete with Audi, VW, Mazda, Nissan, Honda, BMW, Subaru, Hyundai, Volvo, Kia, Toyota, etc. They just need to compete with each other. If all of them tacitly agree to stop innovating, it won't matter. People will still be forced to buy their cars because the foreign options will be too expensive. Their sales will all go up (and they can even raise their prices in the process as long as they keep them below foreign competitors).

US-based companies will be able to hock shit at only-slightly-inflated prices, because consumers won't be able to afford the nice innovative stuff available internationally.

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u/juwisan 19h ago

In regards to physical goods I tend to disagree with your analysis because I find it oversimplified, but I may of course also be wrong. First of all, many of these foreign auto manufacturers have production lines in the US. Secondly US brands also import lots of parts. And thirdly production cannot quickly be scaled indefinitely. So you may see two effects here: Domestic companies products getting more expensive because they also rely on foreign parts and demand outpacing production driving up prices for domestic production.

On top comes the issue of tooling. For manufacturing you need production machines and tools (also think replacement parts and maintenance). These industries are heavily concentrated on Europe and mostly everyone else, including the US Imports Tools and manufacturing machines from Europe. This may face US companies to decide between raising product prices or eventually running outdated machinery for longer.

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u/thekrone 19h ago

That's fair honestly.

Although the analysis I have read says that foreign car companies will be hit much harder than domestic ones on average, there are exceptions.

However, it does serve as a decent example anyway. There are other industries where these tariffs will cut foreign competition off almost completely.

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u/juwisan 18h ago edited 18h ago

That is true. But also don’t forget that these are international companies. Sure in auto specifically they are under pressure in other markets as well but also the US is not really a competitor there (and likely won’t become one either as the US manufacturers simply lack models they could sell in most big foreign markets).

Now however, it’s time for others to react and that won’t be pretty either.

If you look at Apple for example, roughly 60% of their revenue is made outside the US, Meta should be roughly similar. 50% of Googles revenue came from outside the US. It’s similar for Amazon, Microsoft and other big US platform companies. These companies do need to innovate to stay ahead globally. Incidentally, these are the companies least affected by sanctions on physical goods because they sell services. Those are the companies the rest of the world is now probably preparing to go after not only in retaliation but also by putting out big grants for anyone capable of giving them a sovereign alternative, which is going to put pressure on them from all sides.