The Deep View: Report: Tariffs could ‘dent’ VC interest in AI 

Posted on April 16, 2025 by michelleclarke2015
Report: Tariffs could ‘dent’ VC interest in AI Source: Unsplash

Coming off a week of radical volatility, tech stocks have finally seemed to calm down a bit. Shortly after imposing a sweeping series of global tariffs, President Donald Trump pressed the ‘pause’ button, at least for the next 90 days, dropping global tariffs to a base rate of 10% (with the exception of China, against which the U.S. has imposed a 145% tariff). Then on Friday, Trump said that phones, computers and computer chips would be exempt from his “reciprical” tariffs, a cause — as tech bull Dan Ives pointed out — for celebration. 

The Trump Administration, however, has warned that a separate round of tariffs — specific, this time, to the semiconductor industry — are on the way. Earlier in April, the U.S. Commerce Department “initiated an investigation to determine the effects on the national security of imports of semiconductors,” according to a document, laying the groundwork for a tariff. 

What happened: The uncertainty is already getting to venture capital investors, according to a recent PitchBook report. PitchBook estimates that there were a total of around 4,000 VC deals in the first quarter of 2025, roughly on par with last year’s numbers. AI, according to PitchBook, is the exception to this “otherwise sluggish dealmaking environment” — Big Tech companies have not pulled back spending on AI, and significant deals (like OpenAI’s $40 billion round) continue to be signed. 

However, “while demand for AI remains strong, the impact of new tariffs on chip supply chains could dent VC appetite for these investments should companies struggle with pricing increases.”And despite all the ongoing AI popularity and excitement, cost remains a massive challenge.

Investment returns for end users and investors alike remain roughly nonexistent, considering the enormous levels of cash burn required to train and operate AI models, alongside their ongoing problems with security and reliability. So far, many top model developers have been subsidizing the true cost of use with their constant influx of VC dollars; but OpenAI and Anthropic both have recently opened up more expensive tiers (ranging from $100 to $200 per month), even as open-weights providers like DeepSeek continue to offer equivalent performance at radically reduced prices.

More broadly, PitchBook wrote that “the recent tariff announcement has significantly impacted VC activity and IPO plans.” Investors are subsequently adopting a “wait-and-see approach until clarity and stability return.” 

All these business headwinds — lack of tariff clarity, market volatility, cost containment, negative consumer sentiment, etc. — “pressure startups’ ability to meet investors’ growth expectations,” which “could adversely impact the exit environment, keeping a lid on dealmaking activity,” according to the report. 
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About michelleclarke2015

Life event that changes all: Horse riding accident in Zimbabwe in 1993, a fractured skull et al including bipolar anxiety, chronic fatigue …. co-morbidities (Nietzche 'He who has the reason why can deal with any how' details my health history from 1993 to date). 17th 2017 August operation for breast cancer (no indications just an appointment came from BreastCheck through the Post). Trinity College Dublin Business Economics and Social Studies (but no degree) 1997-2003; UCD 1997/1998 night classes) essays, projects, writings. Trinity Horizon Programme 1997/98 (Centre for Women Studies Trinity College Dublin/St. Patrick's Foundation (Professor McKeon) EU Horizon funded: research study of 15 women (I was one of this group and it became the cornerstone of my journey to now 2017) over 9 mth period diagnosed with depression and their reintegration into society, with special emphasis on work, arts, further education; Notes from time at Trinity Horizon Project 1997/98; Articles written for Irishhealth.com 2003/2004; St Patricks Foundation monthly lecture notes for a specific period in time; Selection of Poetry including poems written by people I know; Quotations 1998-2017; other writings mainly with theme of social justice under the heading Citizen Journalism Ireland. Letters written to friends about life in Zimbabwe; Family history including Michael Comyn KC, my grandfather, my grandmother's family, the O'Donnellan ffrench Blake-Forsters; Moral wrong: An acrimonious divorce but the real injustice was the Catholic Church granting an annulment – you can read it and make your own judgment, I have mine. Topics I have written about include annual Brain Awareness week, Mashonaland Irish Associataion in Zimbabwe, Suicide (a life sentence to those left behind); Nostalgia: Tara Hill, Co. Meath.
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