Tariff Hikes Are Hitting CIOs Where It Hurts: The Tech Budget

Tariff hikes are no longer just background noise. They're putting real pressure on CIOs' technology budgets. While no one knows how long the tariffs will last, their impact is immediate. CIOs can't afford to wait. They need short-term strategies to reduce exposure, manage costs, and align with business priorities. Here's how to stay ahead.

Hardware Refresh Delay

Delaying hardware refresh cycles is a fast way to ease short-term budget pressure. Stretching the life of existing equipment can help soften the financial blow. But if you go down this path, plan for it. Technology departments should start storing critical spare parts now for older systems. If something breaks later, you'll avoid delays and inflated replacement costs. This is a tough decision, especially when delaying upgrades, because it might mean higher maintenance costs and limited capabilities in the future. CIOs must weigh savings against potential performance risks.

Expect Cost Increases And Plan for Trade-offs

Rising hardware and infrastructure costs will force trade offs within the IT budget and existing projects in scope. If you don't adjust, your IT spending will quickly increase. Review active projects while staying on course. Essential projects tied to compliance, regulatory mandates, risk mitigation, or supply chain stability should stay on track. Delaying those initiatives could backfire and increase long-term exposure.

Project evaluation shouldn't be a one-off. CIOs can take advantage of the situation by using the tariff hike to make project reviews part of a regular cadence with senior leadership. Business priorities may shift as tariffs evolve, and your IT roadmap needs to stay in sync.

If tariffs threaten to delay key initiatives, map the downstream effects immediately. A delay in one system implementation could ripple through dependent projects and compound risk. Build tariff scenarios into your total cost of ownership models so leadership understands the full financial impact.

Rethink Your Partners and Their Strategy

CIOs can reduce the risk by reassessing where and how their technology partners operate. Start with logistics: Can you change shipping models or deployment schedules to minimize costs? Then, look at geographic exposure. Are you relying too heavily on hardware from one region? Diversifying your supplier footprint can help cushion the blow from regional tariffs.

CIOs must now ask their partners the hard questions: What's their strategy for dealing with tariffs? What parts of their supply chain are exposed? CIOs will need answers before the costs hit their P&L.

Renegotiating contracts can help hedge against volatility. CIOs may want to negotiate and add "not-to-exceed" clauses to keep their budgets stable regardless of tariff movement. If you're revisiting terms, this is also a chance to reset some vendor agreements. Look for ways to improve flexibility and lock in value.

Gartner forecasts a 9.8% increase in global IT spending for 2025, hitting $5.61 trillion. But that growth isn't driven by tariffs. Tariffs may be temporary. However, how CIOs respond now in the short term could shape their tech strategy for years.