Media and tech won’t escape fallout from Trump’s tariffs

When Donald Trump unveiled his odd-looking little chart in the Rose Garden last week, the assembled audience included a number of burly men in hard hats. The message, unsubtle as always, was clear. Trump’s tariff war was being waged on behalf of those who make actual physical stuff. There were no software developers, financial analysts or Hollywood showrunners strategically positioned around the place (although they really could have done with a graphic designer).

As a result, coverage of the immediate fallout has focused on the impact of Trump’s tariffs on trade in manufactured goods, food products or raw materials like aluminium and lumber. There’s been little said so far about the implications for the knowledge industries and services that underpin so many economies in the 21st century.

Yet the interlinked worlds of technology and media and will not escape unscathed from the uncertainty that has been unleashed.

Advertising is traditionally the canary in the coal mine when an economic downturn is on the horizon. With JP Morgan now pricing a 60 per cent chance of a US recession this year, ad budgets are already being adjusted downward. Advertising accounted for about 35 per cent of sales at Paramount Global last year and about 20 per cent at Warner Bros Discovery. The share is far larger at YouTube.

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The ad downturn will be accelerated in the US by the massive tariffs imposed on Chinese imports. Chinese retailers, who account for a multibillion dollar slab of ad revenue on digital platforms. That’s bad news for tech giants like Meta and Google, although some analysts think a flight is likely from smaller platforms like Pinterest and Reddit to the safety of the biggest hitters,

If that proves to be the case, it will be a rare silver lining for Big Tech, which suffered a trillion-dollar drop in value last week, with Apple and Amazon faring particularly badly,

What might a slump in ad revenues and a tech retrenchment mean for the media industry? Previous shocks – like the bursting of the dotcom bubble in 2001 and the financial crash of 2008 – accelerated underlying trends. One of those currently is the consolidation of the video streaming market. With Netflix concentrating its position as the dominant global player, the future for the likes of Prime and AppleTV+ as producers of original content looks questionable. A recession would cause consumers to jettison their secondary subscriptions to services they only occasionally use, further ratcheting up the pressure.

The winnowing of the streamers would be notable. But for media and tech, a full trade war could trigger a further escalation in the simmering conflict between the United States and the European Union over digital regulation. US vice-president JD Vance has already signalled the administration’s opposition to the Digital Services Act (“policing so-called disinformation”) and GDPR (endless legal compliance costs”).

His complaints have been echoed by Meta CEO Mark Zuckerberg, who in January announced his intention to “work with president Trump to push back on governments around the world that are going after American companies and pushing to censor more”.

With tech companies snuggling up to Trump (Zuckerberg just bought a house in Washington DC), there is a clear incentive for the EU to speed up implementation of the antitrust Digital Markets Act.

Then there’s Chekhov’s gun. The Russian dramatist Anton Chekhov stipulated that if such a weapon were to appear in the first act of a play, it would have to be fired before the end. The gun in this case is the “bazooka” that is the Anti-Coercion Instrument (ACI), a drastic mechanism that would allow the EU to impose sweeping restrictions and new charges on US financial and technology services. Introduced in 2023 as a deterrent of last resort, it has been the subject of much discussion since last week.

If the ACI is being actively considered, that would be a sign that a full-blown trade war was on the horizon, with deeply negative consequences for people on both sides of the Atlantic. Just as implausible as the chances of large-scale manufacturing returning to the US rust belt is the idea that EU companies should step up quickly to take the place of US cloud computing, enterprise software, social media apps or entertainment platforms. In the same way that Trump’s levies are a tax on his own voters, it would be European citizens who would end up paying for new charges on American tech.

The Irish Government signalled its aversion to such charges at the weekend when Minister for Media Patrick O’Donovan announced he would not be permitting Coimisiún na Meán to proceed with a proposed levy on streaming services operating here. Such levies have become commonplace in other European countries in recent years as a means of recouping some of the subscription fees paid to the like of Disney+ and Netfix for local TV and film production. As such, they predate the current transatlantic tensions. The Minister told RTÉ on Sunday that he saw “no reason” to implement such a scheme here, and that “people are paying enough” for these services already.

The streaming levy is small beer compared to the high-stakes game of poker now under way between Brussels and Washington. Not for the first time, though, it underlines where Ireland’s political leaders believe the national interest lies when it comes to inflicting any pain on the big tech companies, most of whom have their European headquarters here. They don’t want to do it. But with qualified majority voting in operation for the decisions that lie ahead, they may not have a choice,