April Tariffs Could Dampen Global IT Growth, IDC Warns
The implementation of US tariffs will drive technology prices higher and disrupt supply chains, leading to decreased global IT spending in 2025, according to research firm IDC.
The market intelligence company had previously forecasted 10% growth for global IT spending but is now revising expectations significantly downward in response to recent trade policy developments.
“This situation remains highly fluid and dynamic. Tariffs set to be implemented on 9th April may yet be adjusted or postponed, and the response in other countries could include stimulus measures to protect short-term economic stability in China and elsewhere,” IDC stated in its analysis.
Technology supply chains face disruption while US customers prepare for price increases
The research firm notes that the inflationary effects of these tariffs will manifest most rapidly in the devices market, followed by compute, storage and network hardware, as well as data centre construction. Even sectors typically insulated from direct supply chain impacts will feel the consequences.
“There’s also an indirect negative impact of tariffs on software and services, where the provider delivering the software and/or services will incur increased costs for the infrastructure to develop and deliver the product, meaning that many software and services vendors will need to include increased costs in their own pricing assumptions,” the report explains.
US customers should prepare for swift price increases due to two factors: lean inventories throughout the supply chain and rapid manufacturing cycles that allow little buffer against cost changes. The research firm notes that the comprehensive nature of these tariffs leaves manufacturers with limited options to adjust their operations.
Despite these challenges, IDC found that enterprise IT buyers remained relatively resilient through March, with most organisations attempting to protect their strategic investments.
“While there is significant concern over the uncertainty caused by tariff policies, a majority of firms in March were trying to protect their key investment priorities around AI, analytics, security and IT optimisation,” the report states.
- IDC projects global IT spending growth will drop from 10% to between 5-10% for 2025, with further downside risk if trade tensions escalate
- Hardware price increases will materialise quickly due to lean inventories and rapid manufacturing cycles; software and services will see delayed but significant impact
- Economists now estimate a 40% chance of global recession following the April 2nd tariff announcements
- New contract signoffs expected to slow over the next 6-12 months as businesses delay technology investments amid economic uncertainty
Corporate IT priorities shift towards operational costs as economic uncertainties persist across technology markets
Price sensitivity is increasing among technology buyers, which historically drives competitive disruption in the market. IDC suggests the IT sector will demonstrate more resilience than during previous economic downturns and remain stronger than many other economic sectors.
Cloud and service providers will likely maintain their investment in AI infrastructure deployments, leveraging their ability to optimise asset utilisation more effectively than enterprise customers. For corporate IT departments, the shift from capital expenditure to operational expenditure models means technology spending remains tied closely to business conditions.
Nevertheless, economic slowdown and rising unemployment will directly impact IT budgets. Consumer spending is expected to decline significantly, while businesses will target cuts in devices and on-premises infrastructure to achieve immediate cost benefits.
“IT services spending is vulnerable to a slowdown in new contract signoffs, which will be driven by a broader economic slowdown in the next 6-12 months,” IDC warns. Combined with other economic factors, including US government spending cuts, the outlook for investment in new technology projects has weakened considerably.
The research firm had published a downside scenario on 31st March projecting 5% global IT spending growth rather than their baseline 10% forecast. This scenario was modelled before the April tariff announcements but already accounted for potential economic slowdown effects.
IDC now expects its baseline forecast to move toward the lower end of the 5-10% range in the coming weeks. The firm is developing a new downside scenario that contemplates the possibility of a broadening global trade war with additional tariffs and retaliatory measures from multiple countries.
“Agility is key to navigating this period of major disruption and uncertainty. It may take several months for the full picture to become clearer, but this is already causing delays in some types of investment,” the report notes.
While underlying demand for IT solutions remains strong, and an absolute decline in overall IT spending remains unlikely, the industry must adjust to slower growth in the near term.
“The tariffs announced this week have introduced significant instability into the IT market. If the measures announced on 2nd April stay in place and trigger an escalation of retaliatory measures leading to a global recession, the impact on IT spending will be swift and downward, potentially leading to the worst market performance since the great financial crisis of 2008-2009,” IDC concludes.
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