This analysis was first published in SvD Näringsliv, in Swedish, on April 4th, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
Stock markets are deep in the red as the world tries to understand how the new tariffs will hit. Caught in the middle are the American tech giants — whose global operations are now under threat.
With a combined market capitalisation of well over 120,000 billion kronor, the chiefs of the largest American tech companies had gathered to watch Donald Trump be sworn in as president again. It was late January 2025, and it would be hard to find a clearer image of the twenty-first century’s new economy.
Little did those executives realise that less than three months later, the country would have a trade policy more reminiscent of the late nineteenth century.
Rarely has such a sharp contrast arisen between the way tech giants conduct their global operations and the protectionism that Trump is now introducing with his trade tariffs.
Apple is an American company headquartered in the small city of Cupertino, about an hour south of San Francisco in California. More than half of all its sales take place outside North and South America, with 25 percent coming from Europe. Its products are manufactured to a very large extent by partners in China, and it has in recent times expanded significantly in both India and Vietnam.
Such is the complex global reality and market of this American company. And it is far from alone.
Virtually the entire world — countries, pension savers, and companies — is now trying to understand how the new tariffs will affect them. And they have very little time to prepare. The first tariffs start this weekend, and the rest follow in the middle of next week. The globalisation that placed the US at the centre of the world economy suddenly looks shakier than ever.
Once the initial shock settles, plans for retaliation will be drawn up. The EU immediately came out and stated that it would need to “support our manufacturing industry” — but also that by the end of April it would be targeting “all goods and services.”
The word “services” is particularly significant. When Trump and the US calculate what they perceive as an imbalance in trade, they have only looked at goods. This is, as noted, a very classical view of economics — one that would fit rather more comfortably a couple of centuries ago. For while a typical car sold might carry a profit margin of around 5 to 10 percent, the services company Meta — which owns Facebook and Instagram — had a profit margin of over 43 percent in its most recent quarter. But none of these services are counted in Trump’s model that dictates the tariffs.
This is almost certainly where the EU will strike back hardest. And virtually all of the tech executives who stood on Trump’s stage in January will be affected. Operations such as Amazon’s AWS, Google’s advertising, and Netflix are likely to find themselves directly in the crosshairs. Virtually all of Europe’s digital infrastructure for work and leisure runs on American services. We watch videos on Instagram, chat with colleagues on Slack, and hold meetings on Microsoft Teams. Americans, for their part, use very few European services. They may listen to music on Spotify — but further examples are hard to find. The asymmetry makes this an especially well-suited area for the EU to exploit.
Even if Trump’s rhetoric suggests otherwise, it is often difficult to find clear winners in a trade war. If the EU imposes punitive tariffs on digital services, the profit margins of American tech companies will take a hit. But the price of your Netflix subscription will likely increase too. Your pension savings — heavily influenced by American tech stocks — will be negatively affected. And this has only just begun.
The mere prospect of where this could lead has sent stock markets into a tailspin. On Thursday, over 3,000 billion kronor was wiped from Apple’s market capitalisation as American Nasdaq had its worst day in five years. The last time things were this bad, the world had just begun to grasp the effects of COVID-19. Investment bank JP Morgan raised its assessment of the risk of a global recession to 60 percent — up 20 percentage points from before Trump’s tariff announcement. China responded on Friday with 34 percent tariffs against the US.
The United States wants to drive investment at home through re-industrialisation and a focus on domestic production. But a large part of the country’s economy is locked into a globalised world that cannot be restructured quickly — or perhaps at all. You cannot move factories halfway around the globe. And even if you could, the result would be sharply higher costs for identical products.
Even patriotic business leaders in the United States have now been given serious pause for thought. One can be in principle supportive of the idea of a strong domestic market that takes care of itself. But the reality is that many American companies are locked into a globalised world that has made them both extraordinarily successful — and dependent on the rest of the world. And the tech executives in particular must be wondering what on earth they have got themselves into.
