The tariff war and the cloud

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The Financial Times reports that the information factories for the cloud computing age are about to get caught in the crossfire of the US-China trade war.

Two rounds of US tariffs on Chinese imports totalling $50bn, one of which has already come into effect, have targeted some of the key components that keep data centres humming.

But the tech industry is facing up to a third, $200bn list that takes full aim at key digital infrastructure — from the routers, switches and servers that redirect and process data, to components such as motherboards and memory modules used by bigger cloud companies to assemble their own equipment, all the way to the miles of cabling needed to wire the gear together.

The complexity — and invisibility — of what happens inside today’s data centres has left the sector struggling to draw attention to the seriousness of any rise in its costs. “When you have a tariff list that has TVs and dishwashers on it, the argument is very straightforward,” said Josh Kallmer, head of policy at the Information Technology Industry Council.

“One of the challenges we have is explaining why this matters to ordinary people and companies.”

Data centres have been dragged into the trade war at just the moment some of the biggest internet and cloud computing companies are in the midst of a capital spending boom to build more and kit them out. Much of the investment is earmarked for overseas markets. But they are also making massive upgrades to existing facilities at home to meet demand for extra capacity and new services.
The US levies will hit companies such as Dell that import components from China and make servers and laptops in the US, according to Michael Young, the company’s head of government affairs. “Clearly, this will have no impact on the Chinese policies,” he wrote in a submission to the US Trade Representative opposing the tariffs. “Nor would it create the type of leverage needed to force changes in China.”

How does will effect Microsoft, Google, Amazon, Facebook and other companies which operate the cloud?

Read more on the Financial Times

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