‘Confusion,’ ‘Uncertainty,’ ‘Pain’: Solution Providers Grapple With Trump’s Tariff Regime

Solution provider executives tell CRN that President Trump’s ever-changing posture on tariffs is creating ‘confusion,’ ‘uncertainty’ and ‘pain’ in the channel, even if some agree with the White House’s goal of fixing U.S. trade issues and boosting domestic manufacturing.

When President Trump announced in February that the United States would place additional tariffs on goods imported from China, Maingear CEO Wallace Santos knew the cost of his company’s laptops would get hit, so he decided to move assembly from Asia’s largest manufacturing hub to Taiwan.

The decision delayed the launch of Maingear’s new gaming laptops with Nvidia’s latest GeForce RTX 5000 GPUs by about a month and a half, according to Santos. And the laptops would cost about $70 more per unit due to the cost of shipping China-made components to the island nation as well as higher labor costs in Taiwan, he said.

[Related: Arrow Hikes US Prices In Response To Tariffs]

But the Warren, N.J.-based PC system builder had at least avoided a major increase in import taxes by not shipping finished laptops out of China—or so Santos thought.

On Wednesday, several weeks after Maingear shifted laptop assembly to Taiwan to avoid higher import taxes, Santos learned that Trump had announced a new round of tariffs for countries across the world. Among the roughly 60 countries or regions targeted, a 32 percent tariff would be applied to all products except semiconductors made in Taiwan.

“All this stuff is costly, and we’re like, ‘Did we make a bad move?’ I don’t know yet,” he told CRN in an interview Friday.

Santos—who is among several solution provider executives who spoke with CRN about the tariff situation—said he’s been “losing sleep” and experiencing stress levels he hasn’t felt since the onset of the COVID-19 pandemic five years ago over the “panic” and “uncertainty” that is being caused by the White House’s ever-changing posture on tariffs.

“The uncertainty is the worst part, because you don’t really know what’s happening yet,” he said.

While one aspect of the precarious situation comes from the moving targets for Trump’s tariffs, according to Santos, the uncertainty also stems from whether the White House intends to use the tariffs as bargaining chips for better trade deals and whether any such deals could result in the federal government repealing tariffs.

“Last night, [there were] tweets coming out saying that, ‘They’re talking to countries and they’re renegotiating.’ So it’s like, I see a container [shipment] this week or next week. I paid double the taxes and whatnot, and then they change the structure back to zero tax. Do I get reimbursed? Or how does that work? So it’s challenging,” he said.

On top of the issues with higher taxes on laptops, Santos said he has seen the impact of graphics card vendors moving production out of China, which has caused delays in shipments and, as a result, a shortage of products. This, in turn, has resulted in solution providers buying more than they need, he added.

“The scarcity causes FOMO [fear of missing out]. The FOMO leads to more scarcity because people just buy stuff that they don’t need to buy,” Santos said.

While some solution provider executives like Santos said they empathized with the Trump administration’s goal to fix the United States’ perceived trade imbalance with other countries and grow domestic manufacturing, they admitted that the White House’s way of tackling the issue is causing “pain” and “turbulence.”

“The way it’s been done, it’s been too hectic. We don’t have enough time to adjust,” Santos said.

Solution Providers: IT Spending Will Continue, But It Will Take A Hit

Solution providers told CRN they are navigating a tidal wave of tariff “uncertainty” as they brace for price hikes on hardware and sharply reduced customer IT budgets.

“This just introduces a whole bunch of short-term uncertainty, and we are all scrambling to navigate that,” said Matt Zafirovski, CEO of Buffalo Grove, Ill.-based ACP CreativIT, No. 120 on CRN’s Solution Provider 500.

Solution providers like ACP CreativIT are all operating under the assumption that vendor partners “will all be absorbing meaningful price increases and those will be getting passed on directly to the customer,” said Zafirovski.

At the same time, solution providers are anticipating that some customers will either “delay purchases or reduce the scope of their purchases,” he said.

The delays or reduced budgets come with customers themselves facing financial pressure from the tariffs, according to Zafirovski.

“So many businesses are going to be impacted,” he said.  “If those businesses see a reduced demand for their goods and services then they are going to have less to spend on IT.”

The increased uncertainty came one day after President Trump said the U.S. will impose a 10 percent tariff on all imports entering the U.S. effective April 5. Furthermore, Trump imposed higher tariff rates on some countries that take effect April 9, including a 34 percent tariff on goods from China, 20 percent on European goods and 24 percent on Japanese imports.

The tariff turmoil wiped out $3.1 trillion in stock market value on Thursday in the largest one-day decline since March 2020. Among the biggest losers were tech stocks like Dell Technologies plummeting 19 percent, wiping out $10.23 billion in market capitalization; HP Inc. falling by 15 percent, wiping out $3.87 billion in market capitalization; and Apple falling by 9 percent, wiping out $310 billion from its market capitalization.

“The good news is through the uncertainty we have a role to play to help advise, guide, support and serve our customers,” said Zafirovski.

“The equation just got a little more complicated today, but our mission remains the same: to serve our customers to address their day-to-day technology solution needs and help them build a long-term technology road map,” he added.

To that point, ACP CreativIT is kicking into high gear a FinOps effort aimed at helping customers optimize IT spending with an eye toward identifying cost savings opportunities.

“We need to be there for our clients,” said Zafirovski. “This is a way to help them. We have to make sure customers are continually optimizing their spend.”

ACP CreativIT over the course of the last month has helped several customers avoid the pricing “uncertainty and volatility” from the tariffs by bulk ordering hardware before the price hikes kick in, according to Zafirovski.

“We have it stored in our integration center, and then we manage everything from configuration to deployment,” he said. “We are always working to give our customers predictability, speed and control.”

A top executive for a Canada-based solution provider, who did not want to be identified, said the tariffs and the weaker Canadian dollar are causing “confusion” and a lot of delays in IT spending.

“The uncertainty is causing people to think twice about IT purchases,” he said. “The decision is no longer, ‘We need it, let’s buy it.’ It’s, ‘We need it, but what if we wait?’ There [are] a lot of unknowns for businesses right now.”

Michael Kanan, chairman and CEO of Inacomp, a Southfield, Mich.-based solution provider, said it is important for partners to have a “steady hand” when the industry is disrupted by geopolitical issues.

“This is not something we can control,” he said. “We need to let the dust settle.”

Solution providers said even with higher prices, customers are going to have to continue to spend on IT solutions for critical areas like security and PC refreshes that are being sparked by Microsoft’s end of support for Windows 10 this October.

“At the end of the day, customers are going to have to buy technology regardless of price,” said Kanan. “Are they going to be angry because they have to spend more? Yes, but they are going to have to spend more.”

Disty Exec: Tariffs Causing ‘Confusion’ For Vendors, Channel

Kent Tibbils, vice president of marketing at Fremont, Calif.-based distributor ASI, told CRN that the tariffs are “causing a lot of confusion” for vendors and solution providers.

“We’ve actually had quite a few manufacturers come back and basically say, ‘OK, we’re putting a pause on everything.’ So they’re not quoting [lead times], they’re not quoting pricing until they can figure out what’s the impact of these tariffs,” he said.

These vendors include those who make motherboards, hard drives, memory products and other kinds of components like PC cases and power supplies, according to Tibbils.

“They’ve communicated out that ‘we’re evaluating the impact of the tariffs and whatever that impact is, we’re passing along that [higher] cost,’” he said.

While the pause isn’t impacting products that ASI or the vendors currently have in their inventories, it is impacting specialty products as well as products that solution providers are looking to buy on behalf of their customers in the months ahead, according to Tibbils.

“If you’ve got a bid that you’re trying to do, or you’ve got a contract that you’re dealing with where you’re delivering a certain number of machines every month, or you don’t start delivering for some time, this is going to cause confusion and problems with these potential price increases,” Tibbils said.

Price Increases Expected For Channel; Fears Of Recession

Michael Goldstein, president of LAN Infotech, a Ft. Lauderdale, Fla.-based solution provider, told CRN he expects to see price increases of 10 percent to 15 percent on laptops, desktops and servers, with the likes of Dell Technologies, HP and Lenovo all being impacted by the tariffs.

Goldstein also expects continued price hikes on Nvidia graphics cards and GPUs, which he said have risen as much as 20 percent in the last six months. While the tariffs Trump announced on Wednesday didn’t apply to semiconductors, the president said on Thursday that import taxes for such products will come “very soon.”

“Ultimately these tariffs are going to be passed on to our customers in the form of price increases on hardware products,” he said. “We are all trying to absorb what is happening with the tariffs and waiting to see how it settles out in terms of price increases. So far, we have not had any transparency from our vendors on how this will play out.”

Goldstein said the market-rattling impact of the tariffs has put solution providers on “shaky” ground.

“I haven’t seen the kind of market plunge we have seen now with regard to the tech sector for many years,” he said. “It’s not good for solution providers or our customers.”

Besides the price increases that are sure to come from hardware vendors, Goldstein said he and other partners are concerned about the potential for a recession later this year.

“We are all trying to figure out what our economy is going to look like in the near future,” he said. “There are so many factors in play, from increased hardware prices to fears of a recession, so I am just trying to deal with this day to day.”

Goldstein said he is concerned about the reciprocal impact the tariffs could have as countries respond to the U.S. tariffs.

“The reciprocal effect across the world is something that we have never seen in our lifetime,” he said. “That is where the threat of a recession becomes more likely. It is definitely a scary time. We’ll have to wait and see what the outcome is.”

Even with price hikes on hardware products as a result of tariffs, Goldstein said he expects customers to move forward with IT spending.

“With Microsoft ending support for Windows 10 [in October], this couldn’t come at a more terrible time,” he said of the price hikes he expects to take hold. “Customers can’t put that off. Technology drives every industry. If you fall behind, it just gets more expensive.”

Bob Venero, CEO of Fort Lauderdale, Fla.-based Future Tech Enterprise, told CRN that he believes the Trump administration’s tariff push will fix U.S. trade imbalances and boost domestic manufacturing, but he acknowledged that the tariffs are creating challenges for solution provider companies like his and their customers.

“I think there’s definitely going to be some pain that we’re all going to feel, and our customers are going to feel, but hopefully, I think the end [result] gets accomplished so that we’re a more stable, fiscally responsible country,” said Venero, whose company is No. 76 on CRN’s 2024 Solution Provider 500 list.

Venero, who said he’s been fielding customer calls about tariff concerns, couldn’t rule out the possibility of a recession, but he thinks that would be a better outcome than if the Trump didn’t make any efforts to boost the U.S. economy.

“I’d rather have the short-term pain of maybe a recession versus a depression, right? I mean, we could not continue to go the way we were going,” he said.