In today’s interconnected world, the escalating trade tensions between major global powers are creating ripples far beyond the immediate tariff impacts. While much attention has focused on disruptions to technology hardware manufacturing, the long-term implications for everyday technology users are only just beginning to surface.
These emerging challenges are the gathering storm clouds on the horizon, particularly for UK businesses reliant on cloud infrastructure and cloud-based digital services. The current trade climate, with reciprocal tariffs reaching unprecedented levels, sets the stage for significant disruptions in how businesses access, use, and plan for technology services in the months ahead.
The Current Technology Trade Landscape
Recent months have seen a dramatic escalation in trade tensions, with tariffs on technology components and other things reaching extreme levels. As of April 2025, we’ve seen reciprocal tariffs climb to 125-145% on various goods. Particularly concerning for technology users is China’s suspension of exports of minerals and magnets critical to auto, defence, aerospace, and semiconductor industries.
These developments extend beyond simple hardware availability issues. The modern business ecosystem relies heavily on continuous access to technology services, most of which are underpinned by global supply chains and infrastructure networks that transcend national boundaries.
The Gathering Cloud Storm
While immediate hardware shortages grab headlines, the less obvious implications are for cloud infrastructure, and present potentially greater challenges for businesses. Cloud computing has quietly become politicised, with the US planning new restrictions on access to cloud services that use AI processors by Chinese companies. This marks a significant shift from treating cloud as a neutral utility to viewing it as a strategic asset.
Data centres – the backbone of all cloud services – face unprecedented demand growth. McKinsey reports demand for AI-ready data centre capacity will need to increase at an average rate of 33% annually between 2023 and 2030. Meeting this explosive growth requires substantial infrastructure investment at precisely the moment when trade tensions make such expansion most difficult.
The data centre sector plans a massive £1.8 trillion expansion by 2030 to meet the soaring demand. However, significant barriers including power infrastructure bottlenecks, supply chain constraints, and community concerns could slow this critical development. These challenges existed before the current trade tensions and are now considerably amplified.
Decision-Making Amidst Uncertainty
Perhaps the most insidious impact on technology users comes from the uncertainty created by policy changes that seem chaotic and improvised. Business leaders face what appears to be a relatively long period of uncertainty, complicating strategic planning and investment decisions.
This uncertainty extends beyond immediate supply concerns. When should businesses invest in new technology capabilities? Should they secure additional cloud capacity now at premium prices? How might service availability change in six months? These questions lack clear answers in the current environment, creating paralysis at precisely the moment decisive action may be needed.
Timeline of Unfolding Storms
What might technology users expect in the coming months? While precise predictions remain challenging, we can outline a reasonable range of possibilities:
Near-term (1-3 months)
Best case: Cloud providers absorb initial cost increases, maintaining service levels with minimal disruptions. Businesses experience minor delays in hardware deliveries and modest price increases.
Most likely: Selective service disruptions as providers prioritise certain workloads, particularly in AI-intensive applications. Noticeable price increases (10-15%) for cloud services.
Worst case: Significant service constraints for new AI workloads, with providers implementing quotas. Hardware lead times extend dramatically, especially for specialised equipment.
Medium-term (3-6 months)
Best case: Industry adapts with diversified supply chains, mitigating the most severe shortages. Cloud capacity constraints remain but are manageable with planning.
Most likely: Data centre expansion delays create significant capacity shortfalls, particularly for AI workloads. Businesses face difficult decisions about which workloads to prioritise.
Worst case: Severe shortages in critical components create cascading failures across technology ecosystems. Cloud outages become more frequent as infrastructure reaches capacity limits without planned expansions.
Longer-term (6-12 months)
Best case: New regional data centre investments create more resilient infrastructure. Regulatory environments stabilise, allowing for more predictable planning.
Most likely: A two-tier technology environment emerges, with premium access for critical workloads and constrained access for others. Businesses adapt by developing hybrid approaches with increased on-premises capability.
Worst case: Fragmentation of global cloud infrastructure creates incompatible technology standards. Businesses face difficult choices about which ecosystem to commit to, with significant implications for future flexibility.
Practical Implications for Technology Users
These developments create several critical considerations for UK business leaders:
Budget planning requires flexibility. It’s highly likely that technology costs will increase, quite possibly in unpredictable timing and unexpected ways, necessitating contingency budgets and scenario planning.
Infrastructure redundancy becomes increasingly valuable. Organisations with options across multiple cloud providers and regions will navigate disruptions more effectively.
Data sovereignty concerns gain practical urgency beyond regulatory compliance. UK businesses may need to reconsider where their data resides to ensure continued access.
AI strategy recalibration may be necessary. Plans for AI implementation may need adjustment based on realistic assessments of infrastructure availability in the coming months.
Navigating the Storms Ahead
While these challenges appear daunting, they need not be catastrophic. Forward-thinking organisations can take several steps now to prepare:
- Conduct a comprehensive audit of technology dependencies, particularly identifying critical services with limited alternatives. Evaluate existing contracts for force majeure clauses that might impact service guarantees.
- Develop contingency plans for essential services, including potential on-premises alternatives for the most critical workloads. Consider building redundancy with providers in different jurisdictions.
- Engage in scenario planning to understand how different outcomes might impact business operations and investment decisions. This planning should include financial modelling of potential cost increases.
Conclusion
The coming months present significant challenges for technology users as trade tensions ripple through global supply chains and infrastructure networks. The impacts will likely extend far beyond simple hardware availability issues to affect fundamental access to cloud services and AI capabilities.
By understanding these dynamics and preparing for multiple scenarios, UK business leaders can position their organisations to weather these storms. Those who anticipate these challenges and build resilience into their technology strategies will find themselves better positioned regardless of how events unfold.
The most important action is to begin planning now, before the first raindrops fall.
Peter is also CEO of Flexiion and has a number of other business interests. (c) 2025, Peter Osborn
