Opinions on what might be the impact of tariffs to IBMs hardware business? How much does IBM rely on imports for hardware components? Could there be an impact to software and consulting as well?
11 replies (most recent on top)
Yeah, how many Z customers in China? That will be ugly. That may end up being the time the Chinese get rid of the BIG IRON.
That tariff stuff is going to be very ugly for IBM.
Need to also tax the companies from revenue brought in that support US accounts from offshore
I think the processor chips for the Z and POWER machines are made in Korea by Samsung.
I'd expect many more pieces of those machines (and memory and tape drives) are also imported.
So, yes they will be affected by tariffs.
And of course the cost of them being bought in other countries will also go up.
And all the AMD and NVIDIA and some Intel chips made by TSMC will go up. And some of those are used in the Z and POWER too.
And the cost of all LENOVO products will go up.
He-l, the cost of everything is going up.
With the tariff pressures on the stock price, obviously more layoffs will be needed to get to $300 as upper management wants.
Right now tariffs are only on goods (and imported components are a small part of a mainframe's cost). EU and Asia are keeping their powder dry when it comes to tariffs on services, which will be their nuclear retaliation option. But make no mistake, it's coming. If Trump doesn't back off the tariffs in the next few weeks, they will impose tariffs on US services (and Trump will then be in the position of having to impose retaliatory tariffs on their services). That will be the end of US industry and will probably spark a global depression. Once we cross that line there's no turning back, no more walking back the tariffs to undo the damage.
Lincoln, McKinley, and FDR used protectionist policies to strengthen domestic industries.
1860s economics for the year 2025. Really?
The media tends to frame tariffs as immediate economic threats, focusing on consumer price spikes or trade wars. Why? Because our elite class (doesn’t really matter what side) wants us in constant fear and worry, and they’ve learned a thing or two from the prevailing party in 1930s Germany about using whatever means necessary to influence the populace. Now historically, tariffs were a huge part of how the U.S. industrialized and built economic independence. Lincoln, McKinley, and FDR used protectionist policies to strengthen domestic industries. Trump’s approach seems less about short-term harmony and more about long-term leverage - kind of like using economic power as a geopolitical we-pon. It’s not always pretty, but it can be effective. We’ll see what happens. Sometimes disrupters are exactly what’s needed. For now my attitude is “okay…guess I’m buying low.” I still have 10 years to go.
How will it affect IBM? Who knows. But, I’m sure the “scholars” in charge will use it to justify more layoffs.
Impact? I’d think that would be obvious. It will be an excuse to lay people off and destroy lives. Kind of like the sun rising and the presence of oxygen. They have no business strategy that doesn’t involve destroying people so what difference would any kind of externality like tariffs make? Their plan is layoffs followed by layoffs with more layoffs and then layoffs with layoffs the following quarter and then layoffs.
IBM’s HW business will be subject to tariffs for two reasons
- Most of the more expansive components on enterprise boxes are produced offshore
- Two of three HW product lines are fab’ed in Mexico
Tariffs will definitely apply
Then there is the opposite side of the coin. Most “other” countries in the world will most likely apply reciprocal tariffs to IBM THUS a double whammy
This is obviously going to hurt. Today, IBM claims to be an AI company. It isn't. Before that, IBM claimed to be a Cloud company. It wasn't. (And now IBM has abandoned that pretense altogether.) IBM lives and dies with Z. It's really hard to get off Z but it is not impossible. We shall have to see what happens but if any of the many Chinese bank Z customers can get out from this choke hold, they will have demonstrated a way forward for all Z customers. The Chinese have the will and the means and the way to break any Z dependence they may have.
The administration is pretty much "out of touch." Based on social media commentary today, it appears that they were not prepared for the vigorous response from China to the new "reciprocal tariffs." But China did come back. Hard. (Canada has also responded and the EU might also respond and there might be other responses.) The Chinese are obviously working on their own silicon, AI, quantum, etc., etc., etc. The Z mainframe is not all the magical; it is well within reach (with hundreds of thousands of developers) to get off this AND keep their banking system quite sound. When they do this, they will sell their experience to all who want it. These sales will first be to Europe, Canada, Australia, New Zealand, Japan... where there will be no tariffs. (At this time, the UK, bizarrely, seems determined to cling to some glorious past time and just eat the tariffs.)
It's a long and tedious process to get off Z. But America is now an enemy to many former friends including China. And IBM is nothing if not American. If the Chinese can find a way to get themselves off Z, they will probably give the secret sauce for free. This isn't even close to happening yet, but, if it does, these tariffs are the end of IBM. So, yeah, there is a risk that these tariffs will be a big deal to IBM.
There is no tariff impact on Indian Business Machine.