Tariffs threaten to push data center project costs higher

The Trump administration`s sweeping tariffs threaten to increase costs for building data centers needed to support artificial intelligence, a move some technology and real estate industry analysts said could disrupt a surge in development.

A 25% tariff on steel and aluminum — materials used in these digital hubs — took effect March 12. On Wednesday, President Trump imposed duties as high as 34% on China, Taiwan, South Korea and other countries that supply electronics and other data center equipment. Such price hikes could stymie development of properties for the booming AI industry, some analysts note.

Microsoft, Amazon, OpenAI and other large firms are on the brink of what a JLL executive called the "biggest data center development binge" on record that includes the $500 billion Stargate Project in West Texas. Trump himself called it the “largest AI investment in history” early in his term.

"The problem is that for a lot of these materials, developers need to have a steady supply chain," said Kristen Vosmaer, managing director with JLL`s data center workplace dynamics business, in an interview. He added that once builders deplete inventory already shipped to the United States, "those tariffs will have an impact in relatively short order." ...