U.S. Tariffs to Curb Investment and Consumption Momentum; 2025 Global End-Market Outlook Downgraded

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On April 2nd, the U.S. announced a new round of reciprocal tariffs, followed by a provision allowing exemption for goods with more than 20% “U.S. value”. TrendForce’s latest observations reveal that the lack of macroeconomic improvement since 2024, coupled with the inflationary and recessionary risks posed by these new tariffs, has prompted a downward revision of the 2025 shipment outlook for several end-device markets—including AI servers, servers, smartphones, and notebooks.

Stronger-than-expected shipments of servers, smartphones, and notebooks in 1Q25 were largely driven by brands advancing shipments to the U.S. ahead of the new tariff implementation. TrendForce notes that supply chain players are still evaluating how to absorb increased production costs. Whether U.S. value will be assessed based on brand nationality or manufacturing origin remains a key point of concern for the industry.

TrendForce presents two revised forecast scenarios: In the base case, the 20% U.S. value is interpreted as brand-based—meaning American brands are more likely to secure exemptions for complete systems or finished products. In the worst case, retaliatory tariffs from other countries escalate the trade war, and the U.S. value is defined strictly based on the manufacturing location, which significantly increases the risk of market contraction.

In the AI server segment, the base case assumes partial tariff relief through the U.S. value exemption, while Mexico—being excluded from the tariff list—remains a strategic re-export hub for ODMs serving U.S. clients under the USMCA agreement. However, ongoing political and economic uncertainty may cause OEMs and CSPs to adopt a more cautious procurement approach. Consequently, TrendForce has slightly lowered its 2025 AI server shipment growth forecast to 24.5% YoY.

Under the worst case, escalating tariffs could trigger global inflation and erode consumer spending power. This would likely lead CSPs and OEMs to further delay investments in AI servers, reducing the annual shipment growth rate to around 18%.

For the server segment, pressures from U.S. tariffs are expected to constrain corporate CapEx, leading to more conservative IT budgets in the second half of 2025. Full-year server shipment growth forecast is thus trimmed to 5.4%. In the worst case, the global supply chain would face higher costs and investment hesitancy if tariffs expand to include semiconductors and core computing components, driving server shipment growth down to 2%.

TrendForce also notes that a more lenient interpretation of the 20% U.S. value rule would allow mid- to high-end smartphones to qualify for exemptions, whereas low-end or entry-level models may still be impacted. Amid widespread consumer uncertainty, value-for-money purchases will become more prominent. In the base case, 2025 global smartphone production is projected to be flat YoY. In the worst case, production may decline by 5% YoY.

PC OEMs began pulling forward shipments to the U.S. as early as 4Q24 in preparation for potential tariffs. After the announcement on April 2nd, U.S. brands with established assembly operations in Southeast Asia continued shipping as planned, while non-U.S. brands adopted a wait-and-see approach. With macroeconomic uncertainty expected to suppress both consumer and commercial upgrade demand, TrendForce now forecasts 2025 global notebook ODM shipment growth to slow to 3% under the base case and to 2% in the worst case.