Trump 2.0: Unraveling the Future of Tech Amid Policy Shockwaves

1. Increased AI Spending

Trump’s administration may prioritize advancing American leadership in AI and machine learning as strategic advantages. Trump has historically favored less regulation, which could result in a “hands-off” approach to AI oversight, allowing companies more freedom in AI innovation.

Since Trump’s last term, AI has advanced rapidly, shifting from theoretical potential to practical applications that are transforming entire industries. Trump's campaign has indicated plans to review and potentially repeal the Biden administration's comprehensive AI Executive Order, which set guidelines for AI development. The Trump administration believes that easing regulatory constraints could spur innovation—an essential move to stay competitive in the intensifying AI race with China.

Trump has also intimated that Elon Musk will chair a newly created department of government efficiency, with the stated goal to reduce U.S. government spending by 1/3. In order to accomplish this, a high degree of automation of existing human-performed functions will be required.

Potential Impact:

To support AI adoption, Trump could push for significant investments in AI research and development, especially as countries like China vie for dominance in the field. His administration’s backing might include funding for public-private partnerships, expanding STEM education, and offering regulatory flexibility, enabling tech companies to drive innovation in AI and related technologies.

For Silicon Valley, this AI emphasis could open more investment opportunities, especially in areas like autonomous driving, natural language processing, and cybersecurity. However, as AI technologies raise ethical concerns and potential risks, tech companies could also encounter new oversight mechanisms to ensure the responsible development and application of these technologies.

2. Growing focus on Cybersecurity

Trump has historically advocated for increased defense spending, which could lead to more investments in cybersecurity infrastructure and government contracts for IT companies focused on defense and cyber solutions. In his previous term, Trump introduced a national cybersecurity strategy aimed at modernizing government IT infrastructure and strengthening defenses against cyber threats.

Potential Impact:

Government institutions have increasingly become key targets for hackers in recent years. High-profile incidents like the Colonial Pipeline and SolarWinds Orion breaches notably spurred the Biden administration to strengthen U.S. cybersecurity through a comprehensive executive order early in the decade. Another cybersecurity directive may be forthcoming before the year’s end.

Moreover, with the administration likely supporting the growth of AI, there will be a greater need to address the cybersecurity risks associated with AI technologies. This could lead to investments in securing AI algorithms, data integrity, and countering AI-driven cyber threats, encouraging similar approaches internationally. Companies that provide cybersecurity or AI-driven threat detection technologies may see a rise in opportunities for government contracts, with global IT firms potentially vying to supply the US government.

Cybersecurity is a primary technology program area within the Department of Defense’s Defense Innovation Unit (DIU). The DIU is chartered to rapidly adapt commercial technology for defense and homeland security applications, and partners closely with startups and the venture community to co-develop and adapt cutting-edge security offerings. With venture capital investment in security AI companies growing from $75B in 2020 to an estimated $200Bn in 2025, the federal government will have multiple options to tackle the complex security landscape.

3. Major shift for global IT outsourcing industry

A victory for Donald Trump in the 2024 U.S. presidential election could bring significant changes to the global outsourcing industry. His “America First” agenda, focused on bringing jobs back to the US and strengthening domestic manufacturing, may drive the introduction of stricter anti-outsourcing policies.

Potential Impact:

Such a shift would likely affect industries that depend heavily on foreign labor, especially in major outsourcing centers like the Philippines and India. Despite challenges around visa restrictions, trade protectionism, and currency pressures, there are considerable opportunities in sectors like IT and semiconductor manufacturing.

India's IT sector, which derives 80% of its export revenue from the US, is likely to encounter some challenges under a Trump administration. Trump has consistently opposed outsourcing and has suggested new restrictions for US companies that relocate jobs overseas.

These measures could impact Indian IT firms that rely on American clients for revenue. Furthermore, Trump’s previous stance on H-1B visas — essential for Indian professionals working in the US — indicates that stricter immigration policies could be reintroduced, raising costs for Indian companies and reducing opportunities for skilled workers.

However, a corporate tax cut under Trump could potentially drive more business for Indian tech companies. Moreover, stricter controls on H-1B visas could lead to an expansion of GCCs in India and other countries such as Poland.

Not so Positive Impact

4. Changes in Trade Policies and supply chain will impact tech exports.

Trump's prior administration-imposed tariffs on Chinese technology imports and increased scrutiny of tech exports to China, which impacted supply chains globally. If similar policies return, global IT companies could face challenges in procuring hardware and maintaining cost-effective production and distribution.

Potential Impact:

IT companies reliant on Chinese manufacturing for components or assembly may see costs rise due to tariffs. This could prompt diversification of supply chains or increased regional production efforts in countries less affected by trade tensions.

Companies relying on advanced chips from foreign manufacturers (such as TSMC in Taiwan) may face difficulties if trade restrictions are heightened. Moreover, the previous US administration pressured allies to limit Huawei’s role in their 5G infrastructure. Similar moves could affect other tech and industrial sectors, prompting global companies to reconsider their reliance on Chinese suppliers.

In addition, the new administration is likely to promote a move toward domestic manufacturing, offering incentives to bring production back to the US. Apple, which depends significantly on Asian manufacturing, may feel the pressure to relocate its operations domestically. This shift could generate new jobs but might also raise costs that tech companies could pass on to consumers.

In the telecom industry, Nokia and Ericsson, both based in Scandinavia, would be particularly impacted by tariffs. Many telecom providers have already self-certified their products as Build America, Buy America (BABA) compliant to meet the requirements of the Broadband Equity, Access, and Deployment (BEAD) program. To bypass tariffs, Nokia and Ericsson could increase US-based manufacturing, where they already have some production facilities, though reliance on foreign components could present challenges.

5. Strong Regulatory Control on Big Tech

A key focus of Trump’s tech policy agenda will likely be increased regulation aimed at limiting the influence of major tech companies. In his previous term, we saw the start of antitrust investigations and intensified scrutiny of companies with monopolistic control over digital services and data. The Trump administration also took a strong position against what it viewed as “censorship” by social media platforms, challenging their content moderation practices.

Potential Impact:

This pressure could increase further, potentially leading to new regulations requiring transparency in content moderation to address perceived biases. Companies like Meta (Facebook), X, and Google might face specific challenges in complying with these requirements while sustaining their operations. For tech giants, adapting to stricter regulations could require expanded lobbying efforts, forming strategic alliances, and modifying business models to align with the new regulatory landscape. Potentially, they could also face requirements for transparency reports, fines for non-compliance, and data privacy standards that closely mirror the European Union’s General Data Protection Regulation (GDPR).

6. Impact on the BEAD Program and Developments around 6G and OPEN RAN

A key question in the telecom industry is how a second Trump administration might impact the BEAD program. The $42.5 billion in funding has already been allocated to states, which are now deeply involved in awarding grants to companies building broadband networks.

Potential Impact:

Across the industry, from service providers to vendors, there’s widespread anticipation of strong growth during this period of broadband expansion. However, with low-earth-orbit (LEO) satellite broadband has emerged as a cost-effective alternative to land-lines, the future of BEAD is uncertain. There are inherent bandwidth limitations that will restrict the number of users satellite broadband can support with its existing spectrum and software. This option will need to be balanced with the often-expensive process of providing copper or fiber to rural locations where there is no promise of return-on-investment.

In late 2023, the U.S. Federal Communications Commission re-asserted that it would not follow through on an earlier $900m subsidy to SpaceX, a LEO broadband provider led by Elon Musk, to provide rural broadband. Given Musk’s new position and influence in the second Trump administration, this decision is likely to be revisited in the quest to reduce government spending.

While, the new president is expected to introduce numerous policy changes, the Biden administration's push for open radio access networks (RAN) would likely continue—at least in the short term—under the Trump administration. With significant funding flowing from the National Telecommunications and Information Administration toward open RAN, particularly aimed at military bases and government sites, it’s unlikely this focus will shift in the short term.

With 6G on the horizon, the US faces a significant challenge in managing limited spectrum availability. The spectrum is already heavily used by satellite operators, the military, and other critical sectors, making it essential to address technical issues like spectrum sharing and balancing the needs of incumbent and mobile users. These complexities are expected to take precedence over any political priorities, given the importance of coordinating across such diverse stakeholders.