Steel shock: How Trump’s 25% tariffs could delay data centres and tower builds

Trump argues that the tariffs will revitalise domestic steel production, marking a return to the protectionist approach of his first term.

However, as fears of a trade war cloud the global economy, these new tariffs risk further strain on data centre projects already facing power access challenges and tower initiatives contending with tough market conditions.

Trump’s tariffs are at 25% for steel and 10% for aluminium, the former of which will likely directly impact new data centre projects, as steel is used to create the shell of sites.

Amid the data centre construction boom, there’s been a concerted effort to reduce the reliance on steel as the material is carbon intensive, given it’s made from iron ores via coal-burning furnaces.

Amazon, for example, is using HYBRIT technology, which uses hydrogen instead of coal (or coke) to process iron ore into iron, reducing CO₂ emissions. AWS’s sustainability director recently told Capacity that its steel shift is part of a wider push for more sustainable data centre construction.

While steel tariffs likely won’t halt the influx of new projects from the likes of OpenAI, xAI, and Hussain Sajwani, there’s the possibility the tariffs could lead to supply chain disruptions and product shortages, potentially pushing back project timelines.

According to analyst suggestions, the tariffs will likely force a rise in prices for both imported and domestically produced steel brought on by the increased demand for locally sourced materials.

The anticipated rise in steel costs adds to the spiralling energy prices which are heavily impacting data centre operators.

Take Northern Virginia, one of the US’s densest data centre markets, which has long enjoyed low energy costs compared to other regions. Local energy providers were looking to massively raise prices this April — a move that could price out a lot of operators.

A Goldman Sach’s report suggests that the power demand from data centres is forecasted to increase by 109% by 2030, a rise that could price out new operators without even considering the new tariff considerations.

Along with data centres, the tower market is set to once again feel the brunt of Trump’s tariffs — but the market is well prepared.

Neli Dicheva, head of research for Europe at TowerXchange, told Capacity that many firms in Northern Europe are already sourcing steel from Skanska in Sweden, a move that was in motion following the impact to the Azovstal plant in Ukraine.

Beyond uncovering alternative sources, Dicheva highlighted the rise of alternative materials, including “fiberised” solutions, like Huawei’s Fibre Reinforced Polymer.

Such towers are made up of composite materials that contain a polymer matrix, like epoxy, that are then combined with high-strength fibres like fibreglass, carbon fibre, or aramid.

Huawei has already deployed such solutions with Telecom Egpyt and is looking to offer the steel alternative across Europe.

These alternative deployments come as tower build-to-suit (BTS) costs have gone up by 30% since 2022 triggered by increased interest rates and supply chain disruption.

Towercos are also actively looking at RAN sharing solutions, with a handful offering RAN as a service which Dicheva further compounds the impact on towers, even despite their slower than expected, yet steady rise.

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