President Trump’s steel tariffs have officially come into force, imposing a 25% levy on steel
imports to the US — a move likely to significantly impact data center and telecom tower
projects.
Trump argues that the tariffs will revitalize 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.
Data center impact: Steel adds to ongoing energy headache
Trump’s tariffs are at 25% for steel and 10% for aluminum, the former of which will likely
directly impact new data center projects, as steel is used to create the shell of sites.
Amid the data center 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 center
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.
Daren Shumate, founder and managing principal of Shumate Engineering, said the data center
industry will be “right in the middle of the international tariff wars”.
“Fueled by the rise of AI, the demand for data centers is so great that it’s unlikely that
additional costs for imported steel will have an impact on production.
“More likely, investments could slow down from all the uncertainty coming out of Washington
– not just regarding tariffs, but broader economic policies and efficiency programs as well.”
The anticipated rise in steel costs adds to the spiraling energy prices which are heavily
impacting data center operators.
Take Northern Virginia, one of the US’s densest data center 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 centers is forecasted to
increase by 109% by 2030, a rise that could price out new operators without even considering
the new tariff considerations.
The impact on towers: Shift away from steel
Along with data centers, 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 fibers like fiberglass, carbon fiber, 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.