If President Trump heeds Peter Navarro’s latest advice to impose tariffs on offshore services and outsourcing, the shockwaves could ripple far wider than anyone expects. On the surface, it might seem like a win for American tech jobs, but reality shows it could backfire badly.
First problem, services are invisible. Unlike goods that physically cross the border and get checked by customs, services such as remote coding, call center support, or consulting simply arrive through the internet.
As one trade expert explains, “There is no clear moment when a service crosses a border, which makes tariffs almost impossible to apply consistently.”
The International Chamber of Commerce has already warned that this step would be “legally risky and economically damaging.”
India’s IT sector, one of the largest in the world, would immediately feel the pain. Tariffs would raise costs for U.S. clients, which could reduce the demand for Indian engineers and programmers. Yet American firms would not escape the damage either.
As one technology strategist notes, “Outsourcing is not about cheap labor alone, it is about scale and speed. If you cut that off, U.S. firms lose their competitive edge. U.S IT companies will bleed with competition from European and Asian rivals”
Tariffs on services would increase operating costs for global giants like Microsoft, Google and Accenture. Lower profits almost always alarm investors and share prices could fall quickly.
A leading economist puts it plainly, “Any broad tariff on services is a tax on U.S. competitiveness.”
That kind of investor fear could drag down the NASDAQ and ripple across the wider stock market.
The U.S. tech workforce might revolt. At first, some American workers could cheer, believing jobs will return home. But higher costs often push companies to automate or cut positions altogether, incorporating AI instead of local hiring. This means the very workers the policy claims to protect could face layoffs or reduced opportunities.
As one industry analyst observes, “Policies that look worker friendly at first glance can end up doing more harm than good.”
In trying to “bring jobs home,” Trump may unintentionally weaken America’s innovation engine. The modern tech economy thrives on global cooperation, not isolation. A tariff that penalizes outsourcing could backfire spectacularly, harming Indian IT services, undermining U.S. companies, rattling Wall Street and reducing opportunities for American workers.
So, Navarro's advice should be taken as suicidal than a reform.