ST Explains: How will Trump tariffs affect prices of your Netflix, Spotify subscriptions?
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Singaporeans’ digital way of life could become more expensive as the US global tariff war drags on.
PHOTOS: REUTERS
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SINGAPORE - On May 4, US President Donald Trump threatened to slap import taxes on movies made outside the US to boost jobs in Hollywood.
The service tax comes on the heels of a slew of other new import taxes on physical goods – including steel, aluminium, smartphones and computers – announced earlier in 2025. China retaliated with its own tariffs
While American and Chinese consumers are set to pay more, consumers and businesses in other parts of the world, including Singapore, will not be spared.
The Straits Times technology editor Irene Tham explains why Singaporeans’ digital way of life could become more expensive as the US global tariff war drags on.
What tariffs have been announced?
On April 9, Mr Trump announced a massive baseline tariff of 145 per cent for most Chinese imports
Tariffs are typically a percentage of a product’s value.
A temporary exemption for computers, phones and PC cases from the 145 per cent Chinese import tax was announced three days later.
No reprieve was given to other PC components such as fans, liquid coolers and power supplies.
But China-made PC cases were already facing a general 20 per cent import tariff, in addition to another 25 per cent for cases made of aluminium and steel. This is because a 25 per cent import tax on all steel and aluminium entering the US, including derivative products, took effect on March 12.
Graphics processing units critical to data centres for speeding up the training and deployment of artificial intelligence (AI) models are also caught under this additional 25 per cent aluminium-related tariff.
In retaliation, China imposed its own minimum 125 per cent tariff on US goods. China also restricted its export of rare earths that are critical to the high-tech industry.
On April 11, China changed how it classifies the origin of imported computer chips, deeming the location where the computer wafer was processed as the country of origin – no matter where the chip was developed or packaged.
This rule exempts AMD, Nvidia, Qualcomm and Intel chips produced by Taiwanese foundries from the punitive 125 per cent tariff China imposes on products from the US. However, the rule badly hurts Intel, Global Foundries and Texas Instruments, which produce chips in the US.
Are these tariffs imposed on physical goods only?
Mr Trump’s tariffs had been limited to physical goods until May 4, when he threatened to impose a 100 per cent tariff on foreign-made movies
On May 5, shares of US studios and streaming services companies Netflix, Amazon, Warner Bros Discovery and Paramount went south as markets reacted to the targeted announcement
Over the years, Hollywood studios have shifted production from Los Angeles to the UK, Canada and Australia to take advantage of generous tax credits and lower wages.
Netflix, in particular, counts on its global production network to produce content for international audiences.
Forcing Netflix to make a return to US soil would drive up the cost of production and operations, but failing to do so would also increase costs when the import duties hit.
The foreign-made movie tariff also sparked fears of a broader tax on offshore services, which experts said would contribute to a double whammy on inflation.
Like movie studios, many companies have moved back-office functions such as software development and human resources, technology and payroll management overseas to take advantage of tax breaks and lower wages.
How will the price of your Netflix and Spotify subscriptions be affected?
Foreign-soil service tariffs have a direct impact on prices. A 100 per cent tax on foreign-made movies would increase the cost of production for a company like Netflix, which would likely pass it on to consumers, as history has shown.
Citing “changes to local taxes or inflation”, Netflix in April raised the price of its subscription plans
Experts believe that more price jumps are on the horizon.
“Businesses are not going to charge US consumers significantly more than customers in other regions. The global pricing strategy will be affected,” said international tax and trade lawyer Eugene Lim, founding principal of Taxise Asia.
Another factor that determines what consumers pay is businesses’ exposure to US cloud service providers such as Oracle, Microsoft, Google and Amazon Web Services, whose data centres are mostly in the US.
Data centres are the backbone of the digital world, powering everything from social media to AI model training to cloud computing. The US tops the world with over 5,300 data centres on its soil.
At a distant second and third are Germany and the UK, which host around 500 data centres each. Meanwhile, there are 450 data centres in China.
Since most servers and computing components – including memory chips, sockets, controllers and hundreds of others – are China-made, tech refreshes and upgrades at data centres, which are regularly scheduled, will be exposed to the Trump tariffs.
But Spotify is a Swedish company, one may say. It is also exposed to the import duties as it primarily uses Google for cloud services.
Since 2016, Spotify has used Google cloud for data processing and software development.
The music streaming company is also exploring the use of Google AI tools and large language models to enhance customers’ listening experience and improve content moderation.
What are the alternatives to US cloud services?
Businesses in Singapore using US cloud services are exposed to the Trump tariffs in the same way as Netflix and Spotify.
Cloud service agreements often include clauses allowing price increases, typically upon renewal of the contracts.
Affected businesses could switch to rivals that are not based in the US, or wait out the storm until 2028 when Mr Trump’s term ends.
Chinese cloud providers such as Alibaba, Tencent and Huawei are said to have dangled up to 50 per cent discounts on annual cloud fees. Savings could run into the millions. But migration costs could be hefty if businesses have heavy software customisation and massive databases that are hard to extract and port over.
What is the worst that can happen?
European Union countries are seeking to approve a first set of targeted countermeasures on up to US$28 billion (S$36.14 billion) of US imports from dental floss to bourbon to diamonds, joining China and Canada in retaliatory moves.
In March, Canada imposed retaliatory tariffs on a range of US imported goods
More retaliatory moves will lead to a global trade war, making goods more expensive for billions of consumers around the world and pushing economies into recession.
“China has provided us a glimpse of how countries can retaliate against US tariffs. The US-China measures have effectively stopped bilateral trade in their tracks,” said Mr Benedict Teow, associate at Taxise Asia.
Irene Tham is an assistant news editor and oversees tech coverage as The Straits Times’ technology editor.
