This feels like a full economic solar eclipse.
The sun has disappeared and everyone feels the same question in the dark: What do tariffs mean for me? It is not an ideal metaphor, since a total solar eclipse is a much more common and limited task than the confusion of the global “liberation day”, sown by Trump’s tariffs.
This does not mean that there are no historical precedents here, even if it is alarming. In 1930, less than a year after the black Tuesday, President Herbert Hoover signed the Smoot-Hawley Act, which set tariffs for almost 2,000 imported goods. It is a movement that is widespread that worsens the global economic crisis and Assets‘S Shawn Tully thinks These tariffs could be worse.
It was rough 24 hours. On Thursday, the S&P 500 had the worst decline since June 2020, while the Nasdaq fell over 1,000 points or about 6%, whereby 7 staled wars like Apple And Nvidia Take it on the chin.
In the right round I turn to VCS and ask how they are affected by macroeconomic turbulence. I usually hear something like: “We invest so long -term that this does not apply to us.” Not so this time. In fact, the chorus I heard was pretty much the opposite in conversation with half a VCS on Thursday: many startups in particular hardware and semiconductor companies are on the move. And consumer behavior will see big changes for which VCS are already trying to position themselves.
“It is expected that tariffs and company companies, especially in the areas of hard technology and physical technology that depend on material materials, affect affect Mac Venture Capital and managing director of general partner by email.
For tech startups with hardware products and global supply chains, countries such as Taiwan, China, the Philippines and Vietnam are crucial. However, the bite of the tariffs is not limited to companies that sell consumers such as smartphones and other devices. Hardware is also (famous) an input in cloud-based services such as AI.
The managing director of Thomvest Ventures, Umesh Padval, fears that the Trump tariffs could increase the computing costs and the possibly slow AI innovation. Padvals Fall is: AI calculus costs per token have dropped by 90% in the past three years, but the tariffs on AI, networking and power chips could reverse this trend and support computer costs. If the chip prices rise sustainably, this can negatively influence the AI startups and their customers and increase expenses.
“I think the people in the hardware world know completely,” said Padval. “Lisa SU (CEO of AMD), Chuck (Robbins) at Cisco, all Gear companies, know these effects. Younger software engineers think that they are isolated. The calculation will increase in the end.”
The Nichols from Mac Ventures agree that the tariffs could increase the costs of the Cloud infrastructure, although it is of the opinion that SaaS and software companies will remain largely untouched apart from these “indirect” effects.
Ultimately, Thomvest’s Padval will be considered, a lot will depend on where the final tariff rates end up in the course of the negotiations.
“I think this could currently be a trial of the president,” said Padval. “So if it settles at an appropriate level, we will know more. If it is 5%, it will not make a difference. If it is 30%, it will make a difference. You tell me a number. I will tell you about the economy.”
Despite the uncertainty and worries, Eclipse Ventures partner Aidan Madigan-Curtis, the potential for some positive business effects does not discover.
“US companies that may not have been competitive worldwide may now be able to gain unity on the basis of the economy and open a new limit of corporate reasons,” she said by email.
And Vanessa Larco, a former NEA partner who starts her own consumer fund, says that she is looking for startups that will thrive when consumers are born in a bargain hunting mode.
“Only consumers will cause to rethink their purchases,” said Larco. “More people will be looking for bargains more than usual. I’m looking for companies that help people save money because I think this trend will continue.”
The Redpoint partner Meera Clark agrees that there will be consumer options in relation to savings, even though it will be a complex landscape.
“In order to express it bluntly, tariffs form dark clouds for everyone, including consumer companies,” said Clark, “said Clark Assets by text. “Regardless of whether it is a weaker purchasing power of end customers or a depressive availability of capital in the event of a downturn, nobody is immune. That means that with chaos there is new possibilities … Your fool punch is your chance.”
Startups must therefore be proactive and aggressive, as well as their investors. Because what else can be seen, how the tariffs affect the starting company itself, as promise Phelon, founder and managing director of growth Warrior Capital, said: “This uncertainty will lead to the tactics of most of the breath to find out what happens.”
I assume that the good news is that even a total solar eclipse is short -lived. A clearer economic image will therefore appear in the foreseeable future. But until then we sit in the dark and wait for the sun, as Jim Morrison said.
Icymi …Ki video leader Runway grew up a $ 308 million round With an assessment of 3 billion US dollars. Elsewhere, Assets‘S Jessica Mathews has the ball Trump appointed Scott Kupor And where he still has financial relationships with Andreessen Horowitz.
See you Monday
Allie Garfinkle
X: @Agarfinks
E-mail: Alexandra.garfinklinke@fortune.com
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This story was originally on Fortune.com
