On April 2nd, the United States announced sweeping tariffs on global trade, under a new policy driven by nationalization. Cloud is about to be caught in the crossfire.
With 10% – 49% tariffs imposed on nations that export steel, aluminium, and electronic components to the US – all essential for constructing storage, networking equipment, and cooling systems – the cost of rackspace in your US-based data center could be about to rocket.
The cost of US cloud
According to data compiled by supply chain analyst and Michigan State University professor Jason Miller, last year the US imported around $33 billion in computer parts from Taiwan, $43 billion in computers (including data center servers) from Mexico, and $34 billion in computers from China.
It’s not clear yet how tariffs will impact the collective $325 billion 2025 capital expenditures and investments announced by the big four (Meta, Microsoft, Amazon, and Google), driven primarily to increase artificial intelligence infrastructure.
How will those costs impact you, the end user?
It’s likely that the cost of US-hosted cloud servers will trend upwards, especially as hyperscalers encounter unexpected price hikes due to tariffs on the imported technology necessary to construct data centers. There is also the potential for supply chain disruptions – will overseas manufacturers still be able to supply goods with these tariffs in place? If not, it looks likely that end users will be reliant on older, less powerful hardware for longer.
What should you do to mitigate these impacts?
Firstly, you should fine-tune your cloud setup – overprovisioning, lack of awareness and responsibility, and sprawl are some of the leading factors for overspending. Many cloud-native businesses also suffer hidden fees and inefficient resource management. We’re aghast at what some organizations are paying. UpCloud scrapped egress fees and introduced unlimited outbound traffic in 2024. Our plans are fully flexible, with zero vendor lock-in, so you only pay for what you use. We’re also laser focused on optimizing our infrastructure, which reduces expenses while maintaining peak performance.
We’ve also just begun rolling out new hardware – 5th Gen AMD EPYC 9575F Turin processors designed for the performance and scalability necessary for running AI, and enterprise-grade cloud-native projects. And it won’t cost you a cent more – we pride ourselves on providing the best hardware and service we can.
Secondly, especially in the current geopolitical situation, consider moving your data to Europe. As a European Cloud Provider, UpCloud is committed to compliance with the EU regulatory framework on data and privacy. Our systems and operations are based in Finland, so your data is protected by European regulations when stored inside our European data centres. Furthermore, we are committed to compliance with ISO 27001, ISO31000:2018, and NIST CSF. On top of all this, UpCloud is certified and audited annually to ensure we remain committed and aligned to the The Cloud Infrastructure Services Providers in Europe (CISPE) Code of Conduct.
In safeguarding for the future, optimize your cloud spending, and consider regulatory compliance and robust security as opportunities for revenue generation – building your customers’ trust, loyalty and protecting against financial loss for non-compliance.
