Reed’s view
On Friday, when the global economy was in full panic mode after the “Liberation Day” tariffs, I told you not to panic! There’s just no world in which the Trump administration deliberately tanks the US tech industry.
Of course, it became equally clear over the last week that there’s no master plan.
But there’s some predictability in the directionless economic policy of the White House. You can count on them to throw spaghetti against the wall and try seemingly crazy things. And they know how crucial the tech industry is to national security and the cold war with China. So, in essence, the fundamental trajectory of Silicon Valley hasn’t changed.
What’s different is that this administration is clearly willing to play favorites among companies and sectors. That’s why tech leaders like Tim Cook will have to spend time at the White House groveling for the necessary carveouts. Meanwhile, the tech IPO window may be closed for a while, but waiting on a public offering is something Silicon Valley founders and venture capitalists know how to do. Tariffs on China remain, but there’s a limit even on how far that will go, too.
Where the administration could have the biggest impact on the tech industry is in government-funded research and development. That will determine whether the US wins the quantum computing race and develops nuclear fusion. AI, quantum, and fusion are complementary technologies. Winning in AI but losing in quantum or fusion would be an economic and national security disaster for the US.
But so far, there’s been no action from the Trump White House on this front. It’s pulled back on research deemed a waste of money, or too “woke,” but hasn’t reallocated it to critical projects.
The president scratched his tariff itch, but the most consequential decisions for the tech industry are ahead. The DOGE faction of the administration believes spending on basic research is going to accelerate, with a greater focus on key research areas. But the DOGE folks are up against the longstanding Republican tradition of cutting funding for research. This ideological battle is the one everyone in tech should be watching.
Notable
- China is thinking about quantum. Last month, the Chinese government announced it is building a $138 billion venture fund to invest in new technologies, including quantum computing, AI, and hydrogen energy storage, Reuters reported.
- US tech innovation will move forward whether the government is on board or not, economist Nouriel Roubini told Bloomberg last week. “Mickey Mouse could be in power in the United States, the US is going to have 4% growth by the end of the decade, and it’s going to be higher in the next decade,” he said. “Even Trump, even with the bad policy, cannot screw up technological innovation.”
- CNN’s Stephen Collinson related Trump’s improvisation to the attitude of a real estate shark, “raising the stakes to intolerable levels to seek leverage.” It’s the latest example of Trump, whether accidental or deliberate, acting like a “madman” to accomplish his agenda by making his opponents question his sanity, he writes.