The tariff effect on tech prices 😰

Welcome back to the Technology newsletter 🤖

Tariffs are back in the headlines in a big way. New ones on pharmaceuticals, threats to tech companies, and a report that puts some uncomfortable price tags on the gadgets we all buy.

We've also got a leadership shakeup at OpenAI, China blocking a protest messaging app, and Microsoft and Google racing to lock up the world's memory chip supply.

Let's get into it 👇

✒ President Trump signed an executive order on the one-year anniversary of "Liberation Day" that could impose tariffs of up to 100% on patented pharmaceuticals from companies that don't agree to manufacture in the U.S. Companies have 120 to 180 days to negotiate before the highest rates kick in. (U.S. News)

🎯 Iran's Revolutionary Guard Corps publicly threatened to target 18 American technology companies (including Apple, Google, Meta, Microsoft, Nvidia, and Tesla) in retaliation for U.S. strikes that have killed Iranian leaders. Many of these companies have offices in Israel and the UAE that could be in range of Iranian drones and missiles. (Time)

💼 OpenAI is reshuffling its leadership after Fidji Simo, the company's head of AGI deployment, announced she's taking medical leave. President Greg Brockman will oversee product in her absence, longtime COO Brad Lightcap is moving to special projects, and marketing chief Kate Rouch is stepping down to focus on her cancer recovery. (Bloomberg)

🇨🇳 China ordered Apple to remove Bitchat, Jack Dorsey's decentralized messaging app, from its App Store. The app runs over Bluetooth and mesh networks without an internet connection, which has made it a go-to tool during protests in Iran, Madagascar, Uganda, and other countries. It's been downloaded more than three million times globally. (CoinDesk)

🧠 Microsoft and Google are both racing to lock up long-term memory chip supplies, negotiating unprecedented three-to-five-year deals with SK Hynix and Samsung. Microsoft alone may prepay more than $10 billion. The deals include price floors and upfront deposits — terms the memory industry has never seen before — as AI infrastructure demand has pushed server DRAM prices up more than 90% since January. (KED Global)

🤖 A growing number of AI startups are trying to solve online retail's most expensive problem: returns. Companies like Catches are using AI to create "digital twins" that let shoppers virtually try on clothes with realistic fabric physics before buying. Catches says its tech can boost conversions by 10% and deliver a 20- to 30-times ROI for brands, while Shopify has already integrated rival Genlook's try-on tool into its platform. (CNBC)

📤 Bloomberg reports that "vibe coding" (where people build software by chatting with AI instead of writing code themselves) has gone fully mainstream. 92% of U.S. developers now use AI coding tools daily, and 41% of all code is now AI-generated, up from essentially zero two years ago. (Bloomberg)

If you've been thinking about buying a new laptop, a gaming console, or even a TV, you might want to pay attention to a new report from the Consumer Technology Association.

The CTA crunched the numbers on how current tariffs are affecting the prices of everyday gadgets, and the results aren't pretty:

Add it all up, and the CTA estimates that tariffs on consumer tech could reduce Americans' purchasing power by up to $123 billion every year.

The reason the hits are so uneven comes down to where these products are actually made.

The U.S. imports 86% of its game consoles from China, along with 79% of PC monitors, 73% of smartphones, and 66% of laptops.

Products with the heaviest reliance on Chinese manufacturing face the steepest tariff exposure, and there's no quick way to move those supply chains.

Factories take years to build, and even companies that have been diversifying production to Vietnam, India, and other countries still depend on Chinese components somewhere along the line.

For everyday consumers, the math gets personal quickly.

The Yale Budget Lab estimated earlier this month that tariffs could cost the average American household about $3,800 a year across all goods, not just tech.

And the CTA warns that if prices climb high enough, people will simply stop buying.

Under the most aggressive tariff scenarios, laptop and tablet purchases could drop by as much as 68%, and game console sales could fall by 58%.

That's not just a problem for shoppers, it ripples through the entire tech industry, from retailers to the companies making these products.

All of this is happening against a backdrop of escalating trade action.

Last Thursday, President Trump signed new tariffs of up to 100% on patented pharmaceuticals, and he's continued to adjust levies on steel and aluminum.

The tech industry got a partial reprieve when the Supreme Court struck down some of the original "Liberation Day" tariffs in February, but many duties remain in place, and the CTA report makes clear that consumers are already feeling the squeeze.

If you've been on the fence about a big tech purchase, the sticker price is probably only going one direction from here.