Ask HN: How will uncertain tariff policies impact tech startups and funding?
In what ways will tech startups (and the tech industry in general)? How has your startup been impacted?
We're not directly in some manufacturing thing that depends on supply chains. But I imagine poor stock market performance will limit the funding landscape. Then again, maybe people will want to put their money into private equity, not public markets.
Funding is a big concern – and startups are especially vulnerable since they don't have existing customers to help ride out almost everyone being hesitant about new costs at the same time – but one other factor I'd consider: for the entire history of computing, the world has generally been comfortable using American products. Almost everyone trusted Intel, AMD, Motorola, etc. to make their processors, trusted IBM, Microsoft, Apple, etc. to build their operating systems, gave Google the ability to automatically ship code updates to their desktops, and the U.S. tech industry has seen trillions in profits because of that. People didn't think the U.S. was perfect by any means but most people would have used terms like “rule of law” or “democracy” when describing us, and very few people worried about trusting American tech products (yes, there were some but they've been ).
Now _everyone_ else in the world is asking what happens if the Trump administration leans on an American company, or whether they even have to lean when the CEO is sharing a stage. Does an attack on Canada start with a Windows or Chrome update? Will CrowdStrike agree to ignore the NSA's exploit codes? Can a politically-connected insider get the CIA to help them beat a competitor? Will AWS turn off service if it's deemed strategically necessary, similar to how Ukraine's military capabilities were threatened to force them to accept a worse deal?
None of those questions have an affirmative answer so far, but everyone has to weigh the odds of something previously unthinkable actually happening and that is a new and quite disturbing place to be for someone launching a startup if you expect to have customers in other countries. Canadians appear to be taking the lead right now but there are many people in many countries who are not going out of their way to help the U.S. economy and startups are going to have to deal with that without an existing reputation or referrals to balance it out.
The world is also moving away from American companies. Startups in the US will not grow as fast. European and Chinese markets beat American markets last year, so capital is moving out of the United States.
Probably, harder to raise money or exit.
On the other hand, with lack of regulations, it might be easy to offload cost on to public. I suspect we will see a lot of scammy fintech, environment destroying projects, alternate medicines, and snake oils. I am actually excited and bullish on CRSPR and genetic editing tech.
Large uncertainty and instability in the markets is not a good environment for investment.
It’s worth keeping an eye on this come end of March.
https://fred.stlouisfed.org/series/GEPUCURRENT
You ever invested in an Aluminum stock? How about lumber? You'll have no idea what exactly makes those stocks move up and down unless you know the financing of that industry. The idea that these things are going to move equities in random sectors is not real. The market wanted to take profits, and this was a perfect reason to do so.
The only trade war that could possibly exist is between the US and China, and that will always be saber rattling because neither authoritarians can truly control 350M/1BN people. It's a fuck around and find out situation and they wouldn't do it.
Trump has pals in these particular industries and he's squeezing out profits for them, that's all. It's not going to affect Snapchat meaningfully other than a sentiment trade. If anything, the argument can be made that Trump is playing into the market downturn to force the hand of Jerome Powell to drop rates faster. These people desperately all need to raise debt right now at lower rates, especially Elon.
Trump is the self-proclaimed "king of debt" - in his first turn he already pressured the Fed to lower rates.
Tariffs are the least of your problems for non hardware startups. The biggest funding impact is from a more conservative (small “c” conservative) stock market that isn’t hungry for IPOs of unprofitable companies and a global regulatory environment that makes acquisitions harder. The acquisitions that do happen will be at much lower valuations.
That means exits are going to be harder and VCs don’t see a light at the end of the tunnel.
As far as stock market performance, now is the time to buy when prices are lower. Trump won’t be in office forever and Democrats and sane Republican politicians - all of them except Trump - hate tariffs.
> Trump won’t be in office forever
As a person, he won't be, but there isn't gonna be "standard" elections in 2028, and its likely going to be someone in his camp. I wouldn't bet on economic strength of US going forward.
Desantis (unfortunately the governor of my state) and others have proven that you can’t have Trumpism without Trump. His supporters only come out for him.
Trump won both times based on his ability to bypass traditional media and he was not beholden to the RNC nor corporate donors or traditional Republican big donors like the Koch brothers.
That being said, I am looking to start diversifying into some global index funds until I can figure out which region has any prospects.
My wife and I are also planning to establish legal permanent residence in Costa Rica while still keeping our US home closer to retirement. It’s a three year process to become a permanent resident. We are staying in San Jose next year for a few weeks to check out some of the neighborhoods.
But the requirements are relatively easy - either as a digital nomad while working or in retirement you just have to prove you have at least $1000 a month coming in.
Its not about who is in charge, its about the willingness of current administration to literally circumvent legal process, because nobody is going to stop them.
The next republican candidate can be very unpopular, but if they don't win, they will just declare some bullshit about rigged results, and put in the fake slate of electors like they tried to do in 2020, except this time, they will have almost no obstacles in doing so, and if it doesn't work, they will keep the results forever in limbo while Trump or Vance still has power.
Many people still don't understand this fact - US is finished as a country.
That goes back to there is no Trunpism without Trump. No one is going to storm the capital for Vance. No one else can get away with doing what Trump does.
I have no faith in the US as a country anymore. I agree with you. That’s why I am preparing to have a dual residence somewhere - right now the best place looks like Costa Rica
Are we sure Vance hates Tariffs? It seems Trump has surrounded himself with people that think like him. There’s no “adults in the room” like the first administration.
He is surrounding himself by sycophants who won’t speak up or fight back.
We know for instance that Rubio’s foreign policy stances are the opposite of Trump’s. But he is towing the line.
It’s not so much there are no adults in the room. It’s that they are all spineless.