Tech giants call Trump tariffs 'big headache' — Foxconn CEO teases increased production in US

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The US government's unpredictability flummoxes many of the tech top dogs.

Foxconn workers surveying build progress on the Wisconsin plant
(Image credit: Foxconn)

Chairman Young Liu claims Foxconn's largest tech partners are getting a "big headache" from the Trump administration's tariff strategy. Foxconn held its latest earnings call on Friday, during which Liu discussed the impact of the U.S. government's recent trend of rapid declaration and rescinding of tariffs on its business.

“Judging by the attitude and the approach we see the US government taking towards tariffs, it is very, very hard to predict how things will develop over the next year," shared Liu in the Friday earnings call. “The issue of tariffs is something that is giving the CEOs of our customers a big headache."

Hon Hai Precision Industry Co., better known as Foxconn Technology, is the world's largest electronics contract manufacturer. Known for producing most of Apple's supply of iPhones and other devices, Foxconn also manufactures the big three modern video game consoles, Amazon and Nvidia server equipment, CPU sockets, displays, and countless other flavors of modern electronics at plants worldwide.

Liu continued, claiming that many customers have been coming to Foxconn and planning to move more manufacturing to the U.S. in response to tariff insecurity. Thanks to its failed Wisconsin Valley project, Foxconn does not have a sterling reputation for U.S. manufacturing moves; the company pledged $10 billion to the region to employ 13,000 workers. However, Foxconn has now mostly abandoned the project, much to the chagrin of the state's residents.

Chip War With China Continues To Intensify

For companies like Apple to come to Foxconn and begin planning to move manufacturing to the United States either speaks to an overconfident Foxconn or a tech industry very worried by President Trump's frenetic tariff strategy. Trump has escalated his "chip war" with China to a much wider-scale tariff offensive aimed at China, Mexico, Canada, and other countries, asserting that tariffs are the key to boosting the U.S. economy and supply chain. Recently, Trump's promised tariffs have often been delayed or canceled before they can begin, adding a layer of insecurity to an already confused market.

"Under the uncertainties related to geopolitics and tariffs, manufacturing will face challenges and demand might also suffer,” Liu stated to shareholders. As President Trump dismantles the Biden-era CHIPS Act and welcomes TSMC's new $100 billion investment into Arizona spurred on by fear of tariffs, the U.S. policy on the tech industry is suddenly doing an about-face. Tech companies looking to maximize operations and profits in the second Trump era must consider the correct response to the threat of tariffs harming margins, assuming such tariffs aren't taken back early.

Foxconn is not likely to struggle too much in the upcoming business year. Server assembly revenue grew 78% in Q4 2024, with the success of mid-level AI firms like DeepSeek causing Liu to predict that this sector will double for Foxconn in the current quarter. Whatever comes for the world's tech giants, mercenary companies like Foxconn will likely benefit, even in the face of its subpar performance in places like Wisconsin.

Dallin Grimm
Dallin Grimm
Contributing Writer

Dallin Grimm is a contributing writer for Tom's Hardware. He has been building and breaking computers since 2017, serving as the resident youngster at Tom's. From APUs to RGB, Dallin has a handle on all the latest tech news. 

15 Comments Comment from the forums
  • davisch
    I think that's the point of tariffs. They are meant to inconvenience both the consumer and producer of foreign goods, trying to steer people to produce and consume domestic goods, which it can tax, while collecting tax revenue on foreign purchases. The government wins either way. Usually, governments impose tariffs on goods that already have substantial domestic production, like car parts and wine, not things like computer chips.

    I don't agree with heavy-handed governance tactics, like tariffs. Government meddling in markets tends to lead to black markets and crime rings because people are just that way. They want what they want and they will find a way. That said, tariffs are actually very common across the world. We just don't hear about them very often because of political politeness.
    Reply
  • Notton
    davisch said:
    I think that's the point of tariffs. They are meant to inconvenience both the consumer and producer of foreign goods, trying to steer people to produce and consume domestic goods, which it can tax, while collecting tax revenue on foreign purchases
    The producer is not inconvenienced by tariffs all that much.
    A government can collect revenue from sales of a foreign goods within its own borders with.... a sales tax.
    The only persons who get the short end of the stick are the consumers.
    And it's a double whammy if the parts are purchased abroad, but are assembled in the USA because the factory/builder is going to pass the extra cost on consumers.

    Lastly, it doesn't help that the implementation is bonkers and changes by the day.
    Reply
  • phead128
    US labor wages is orders of magnitude more costly than other countries labor wages, so the tariff needs to be very high to force manufacturing to return to US, otherwise they just move to Mexico, Indonesia, Vietnam, etc... You still have a trade deficit, just moving it to a different low-cost supplier, doesn't solve the job issue.

    Also, it takes on average 1 year to build a factory, and 2-3 years to scale up production. Trump will be long gone before you even remotely see the benefit.
    Reply
  • alrighty_then
    The tariffs bring financial pain, higher costs, and uncertainty - in the short term. But they also bring back jobs that were never coming back any other way to America. Such is the deal.

    I just wish I had predicted people would pearl-clutch in reaction to the uncertainty and I could have profited more off the stock market drop!
    Reply
  • davisch
    Notton said:
    A government can collect revenue from sales of a foreign goods within its own borders with.... a sales tax.
    Yes, but why settle for a sales tax when you can have that and payroll, property, corporate, etc. taxes or the tariff on top of it? Like I said, It is garbage market meddling to appear virtuous to a voting base. All presidents do it and by some strange luck, their peer-group happens to get rich in the process. Its just louder now, so we're forced to be more aware of our government's misdeeds. I just wish people would be more upset in the off-season (when their preferred guy is in office) instead of cheerleading the consolidation of power that will inevitably be used to their displeasure during the next cycle.
    Reply
  • phead128
    alrighty_then said:
    But they also bring back jobs that were never coming back any other way to America.
    It didn't work in the first tariff war during Trump's first term.

    Trump's first-term tariffs reduced total manufacturing employment by a net 2.7% (source)
    Reply
  • blppt
    alrighty_then said:
    But they also bring back jobs that were never coming back any other way to America. Such is the deal.
    That's the thing though, unless you have a person and party in power longer than 4-8 years, you simply cannot push that massive a change. So, what is far more likely to happen is that we get hit with the tariff penalty now for basically nothing.

    And if you think people are going to put up with significantly higher prices for these onshore products you weren't paying attention to what caused the last administration's downfall.
    Reply
  • JayGau
    "The US government's unpredictability flummoxes many of the tech top dogs."

    There is currently no US government. It's like you take out all the top admins of a company and replace them with some monkeys that just destroy the office's furniture and computers. During the first Trump's term, the monkeys were being kept in cages and watched by more or less responsible people. This time around they are completely loose and free to do anything they want, and after only two months it's already a nightmare.
    Reply
  • razor512
    The tariff issue is sadly a necessary one to deal with in order to avoid hollowing out the economy. A country cannot rely on an entirely intellectual property economy as during global economic turmoil, those aspects of an economy easily crash.

    A leading cause of trade issues where the US is largely unable to effectively make things locally and export them, is due much of the rest of the world establishing various unions and trade blocks which allows them to effectively establish high tariffs with countries like the US, but low or no tariffs with their friends. With an international market environment like that, regardless of labor costs or with the current push to match corporate tax rates with many European countries, if a company wants to expand beyond the US market, then they will be strongly incentivized to move as much of their operation outside of the US as possible, especially if the US maintains low or no import tariffs, as that will allow them to still have cheap access to the US market, while having lower tariffs with many other nations. It is overall a convoluted web of loopholes where they can still technically comply with WTO rules while maintaining tariffs rated that those countries will find otherwise offensive if imposed on them. The loudest international voices opposing the move, are often the ones with very high base tariff rates and numerous regional agreements and international pacts. This leads to heated emotions as it means those nation cliques will end up experiencing their CET being imposed upon them by the world's largest importer.

    If the US implements a policy if reciprocal tariffs, then those countries that like to export to the US, but want to discourage imports from the US that will compete with their local industries, they will be pressured to lower their tariffs in a way where they have no leg to stand on to complain, this is why the criticism of the policy avoids going into specifics, and is often just emotional expressions of anger, with no self awareness, as the nature of the policy, puts the US tariff rate entirely in the hands of the foreign country, since the foreign tariffs are simply being mirrored. Things get muddied though when the idea of it leads to retaliation, which leads to many new tariffs that are not reciprocal in nature.

    Outside of situations like this, tariffs have one other protective function, which is to prevent nation state market manipulation. For example, there are actions that are hostile in nature but have a short term positive impact on the target. For example, suppose one nation sells a refined material to another nation at well below market value, e.g., refined material at almost the same cost as the unrefined material. In such a case, all of the buyers will jump at the opportunity to purchase cheap refined materials; often never passing those savings onto the consumer, and instead pocketing additional profits. In cases such as those, often the hostile foreign actor will subsidize the their local industry to allow it to sell items at below cost prices. Since governments have deep pockets, a dumping operation by a nation state can be maintained for quite a long time, while a private company in the target country will eventually go bankrupt. In situations like that, the hostile country then will switch to charging well above market rates and make back all of the subsidies and vastly profit.
    Reply
  • watzupken
    alrighty_then said:
    The tariffs bring financial pain, higher costs, and uncertainty - in the short term. But they also bring back jobs that were never coming back any other way to America. Such is the deal.

    I just wish I had predicted people would pearl-clutch in reaction to the uncertainty and I could have profited more off the stock market drop!
    I think someone has to do this in order to prevent jobs from flowing out of the country. Big corporate have raked in a lot of money outsourcing work to cheaper locations. So while people can buy these products cheaper due to the lower cost, it also means less work in the country since more and more jobs will start "leaking" to these cheaper countries. This is exactly what we can observe for decades.
    Reply