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How CIOs and CISOs Can Navigate With Balance
U.S. President Donald Trump on April 2 signed an executive order declaring a national emergency under the International Emergency Economic Powers Act to address the country’s trade deficit and nonreciprocal trade practices.
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The EO imposes a 10% baseline tariff on all imports starting April 9, with additional “reciprocal tariffs” targeting over 60 countries identified as having significant trade imbalances with the United States. These tariffs will rise 34% more for China – 54% overall, 20% for the European Union and 26% for India. While this will unleash a global trade war, it poses a daunting task for technology and cybersecurity leaders caught in the crosshairs.
A CIO or CISO planning a data center refresh or cybersecurity rollout now faces a stark reality. Costs will rise and implementation will grow more complex. This disruption extends beyond regional boundaries to affect global supply chains. While semiconductors may receive some exemption protection, most enterprise IT hardware – AI servers, routers and storage units – will bear the full tariff burden.
Technology and cybersecurity leaders worldwide must now develop new strategies to navigate this trade landscape.
The Shockwave and Its Aftereffects
The technology sector thrives on global interdependence, and this new tariff policy will send ripples far and wide. Let’s consider some hypotheticals. A server worth $10,000, assembled in China, may skyrocket to $15,400, while one worth $5,000 jumps to $6,000 or $6,500 due to a 15% to 20% reciprocal tariff. Supply chains, still reeling from chip shortages and shipping delays, will face fresh turmoil as technology OEMs scramble to shift production to Canada, Mexico or even U.S. facilities. Lead times could stretch from weeks to months, and quality control might falter as new plants ramp up.
The stakes are even higher for cybersecurity. A $50,000 firewall could rise to $77,000 under China’s tariff burden. Retaliation may follow, with state-sponsored cyberattacks from nations such as China, North Korea or Russia targeting firms reliant on imported technology.
The tariffs, designed to boost U.S. manufacturing, may strengthen domestic technology infrastructure over time. For example, Intel’s Ohio facility producing chips and HPE’s Texas plant assembling servers could become viable local alternatives that reduce supply chain concerns. U.S.-based CISOs might benefit from shorter supply chains with decreased risk of hardware tampering, addressing persistent worries about Chinese backdoors. But these benefits remain years away. The immediate future – 2025 and 2026 – presents a challenging period of increased costs, extended delays and heightened security threats.
Enterprise Tech in the Crosshairs
These tariffs could act like a sledgehammer on enterprise tech budgets. Consider a mid-sized EU company planning a $1 million server refresh; post-tariff, the cost could shoot up to $1.5 million if sourced from China. Capital expenditure will bear the brunt. Hardware-intensive projects like data center expansions or branch office upgrades might face cancellation. Smaller firms with limited IT budgets could halt non-essential purchases entirely, clinging to legacy systems longer than planned.
The fallout cascades. Technology refresh cycles, at least in the short term, will stretch – for example, a 2025 server upgrade might be postponed to 2027. Outdated tech hampers efficiency: a large business application could struggle on 2019 gear, or productivity might suffer from aging endpoints. Maintenance costs could increase as faults multiply in old equipment. The mean time between failures drops after the life cycle, driving annual maintenance expenses higher. Compatibility issues may mount too; new software such as Windows 11/12 or SAP’s latest version demands modern specs, leaving organizations with costly work-arounds or sub-optimal tech stacks.
Cybersecurity takes a harder hit. End-of-life equipment or software loses vendor patch support, widening the attack surface. Hackers exploit these flaws. Breach costs, which average $4.88 million according to IBM’s Cost of a Data Breach Report 2024, could climb even higher. Compliance pressures add to the strain – PCI DSS and GDPR don’t bend for market conditions. Some CIOs might pivot to the cloud, avoiding hardware costs with AWS, Google Cloud or Azure, but on-premises systems like SCADA or operational tech won’t adapt so easily. It’s likely that organizations will consider stockpiling tech before April 9.
How CIOs and CISOs Can Navigate the Storm
Imagine a CIO and CISO at a logistics company planning their 2025 strategy – new data centers and a zero trust-based identity and access management rollout – now at crossroads.
Options are limited, but combining determination with strategy can help. CIOs should audit their hardware pipeline, approving only mission-critical refreshes and essential investments in emerging tech. Here, the cloud may become their best option, shifting upfront CapEx to OpEx spread over time. CIOs could also work with technology partners, negotiating better deals or exploring competitors offering lower prices.
For CISOs, tariffs tighten the balancing act. Prioritization is necessary: customer data and IP protection take precedence. A temporary solution might involve running existing gear with software patches while reallocating budgets to automated threat intelligence and enhanced monitoring. Yet regulatory compliance leaves little flexibility – investments in cybersecurity, vital for trust and reputation, remain necessary.
Playbook to Minimize Tariff Impact: Data, Collaboration, Advocacy
Together, the CIO and CISO – with other stakeholders – must present a united front. They should model tariff impacts – 20% to 35% or higher cost increases – and highlight significant delays in tech acquisition to the CEO and board. New financing approaches, such as subscription models or extended payment terms, can reduce the impact. Collaboration is key; working with procurement to renegotiate supplier timelines is a start. Though challenging, advocating for broader exemptions or tariff-funded tech innovation through industry organizations is possible. The strategy: adapt to the changes, secure the core and focus on outcomes.
The tariff wars of 2025 aren’t a hiccup – they’re a significant challenge. For CIOs and CISOs, the next two years will test budgets, risks and legacy tech. Yet this could be an opportunity to rethink supply chains, embrace the cloud as an OpEx model and build a more resilient, self-reliant future. Technology leaders must navigate carefully – balancing immediate costs with long-term benefits.