Private Cellular Adoption Will Slow Down amid U.S. Tariff Uncertainty

Throughout the past few months, the Trump administration has brought about economic uncertainty through different measures aimed at cementing the United States’ global dominance. Among them is the implementation of tariffs on products coming into the United States from other countries. Starting in February, the current U.S. government has imposed a variety of tariffs on different countries, ranging from 10% on amicable partner countries to 145% on China to promote U.S. products and reduce external reliance. This is incredibly important given the nature of the global manufacturing supply chain—raw materials are mined across various centers, then processed, formed, combined, and finished across multiple locations, only to be resold in different markets. With these tariffs, production costs will become higher, costs will be shifted to consumers, and this will lead to recessionary headwinds.

For a market like that of private cellular, which largely relies on customer willingness to invest in new infrastructure to innovate, this could significantly impact sales for Mobile Network Operators (MNOs), System Integrators (SIs), and, most notably, infrastructure vendors. Although it has gained major ground and enterprise recognition recently with the rise of use case-centered offerings from market leaders such as Verizon, higher prices may be enough to dissuade customers from engaging in private cellular implementation—especially in the short term.

The United States has since paused its tariffs, but this is one among the many destabilizing activities the Trump administration has put into place over the beginning of the president’s term. For one, he threatened to fire the chair of the Federal Reserve. He has also cut off U.S. funding to the World Trade Organization. In any case, this marks a series of events that have caused global, macroeconomic uncertainty.

Indeed, the leading infrastructure vendors are based, and often manufacture outside of the United States, and partner with local telcos based within the countries of deployment—creating a buffer from reliance on North American entities. However, this by no means suggests that these firms will come out unscathed.

Private cellular deployments are composed of several hardware, software, and services components, most often sourced from different global vendors, giving rise to a complex supply chain. In the United States, intangible assets such as software and services are exempt from these tariffs; however, potential markups of up to 25% on hardware (including Radio Access Networks (RANs) and private cellular core hardware) may be prominent as suppliers look to shift costs onto their customers and create a higher Total Cost of Ownership (TCO), blocking out Small and Medium Enterprises (SMEs) from adoption. Pricing of direct hardware is not the only concern—especially in use case-centered propositions, wherein the full stack of hardware and software is procured. Pricing of components such as edge devices, Internet of Things (IoT) sensors, cameras, tablets, and communications devices would also increase. This will also affect maintenance and expansion efforts for existing private cellular networks, as well as ongoing Proofs of Concept (PoCs) and rollouts as enterprises’ spending power plummets. Simultaneously, this distress and uncertainty may also give rise to a greater reliance on private cellular—especially in the United States. As wages rise due to inflation, and the pool of skilled workers continues to age out—the country’s job vacancies reached 7.6 million, and 12.8% of citizens are age 65 years and older in 2025—automation becomes a more critical facet of operations. More heavily adopting automation efforts for U.S. companies will mean it will be able to free up more of its human capital budget and repurpose this for measures that will affect their bottom line.

Outside of the United States, the immediate effect of these tariffs would be the abundance of cheaper components, as non-U.S. infrastructure vendors (such as Nokia, Ericsson, and Samsung) will have to offload their supply as their market considerably shrinks when U.S.-based customers are priced out. Long term, this will reduce the profitability of these firms, as demand equalizes—these players have lost one of the most mature private cellular markets in the world. Additionally, reciprocal tariffs could be implemented by other countries upon the United States, further fragmenting the supply chain, especially with critical automation components such as chipsets. Amid this, enterprises will feel economic turbulence as their additional operational costs build up due to the tariff-imposed price hikes, limiting their ability to expend capital. This will not only require firms to deal with their current problems, such as addressing skills gaps and innovation, but also force them to rethink their cost structures and further increase efficiency to stay afloat. General economic uncertainty is sure to put a halt to investment, inclusive of private cellular networks. To reduce spending, enterprises will look to maintain existing, legacy connectivity systems, shifting focus from greenfield to brownfield deployments, and leveraging existing infrastructure. This may mean a decrease in non-core functions such as Augmented Reality (AR) or Virtual Reality (VR), massive IoT, and drone inspections, among others. This means that firms will prioritize their short-term profitability over long-term digitalization goals. Of all players, firms offering as-a-Service propositions will be the most likely to see activity as costs are shifted across longer-term payment plans.

Although there is no silver bullet, infrastructure vendors must consider several factors to minimize the impact of tariffs on their portfolio:

• Audit Supply Chain and Source Alternative Components Manufacturers to Reduce Deployment Delays: In the long term, it makes sense to build up reshoring plans for U.S.-based firms, especially if sourcing, manufacturing, or assembly occurs in China. In the short term, although the Trump administration excluded tariffs for specific electronics such as smartphones, computers, semiconductors, and screens, among others, U.S.-based firms should still take this as a cue to source small electronics from other price-comparable manufacturing hubs, such as India. To remain risk averse, firms may also utilize consumer-grade technology in their offerings, to mitigate the tariffs, as Amazon Web Services (AWS) has done. Outside of the United States, firms will benefit from short-term discounts on infrastructure. Although there may be an effect on general spending habits and generally more costs along the supply chain, these firms have the strategic advantage to partner with hubs across Latin America and Southeast Asia to create manufacturing opportunities outside of the United States.
• U.S. Vendors May Have an Opportunity Abroad, but the Opposite Is Less Likely to Pan Out: As the United States looks to promote its supply chain independence, its infrastructure vendors stand a chance to target emerging markets if these firms ensure that their solutions target specific use cases, are flexible in payment plans, and are relatively affordable. However, none of these will matter if reciprocal tariffs come into play, which will only drive firms to source from China. On the other hand, the tariffs have made it difficult for non-U.S. players to enter the U.S. market, as their prices are effectively multiplied. The only way this may be mitigated is through an emphasis on virtualization.
• Private Cellular Offerings Must Highlight TCO and Clear Return on Investment (ROI): Customization and non-core functions are no longer attractive. Enterprises need to invest in solutions that with clear returns and validated business cases. End-to-end use case-based offerings, especially when paid in an as-a-Service scheme, are the most potent ways to position solutions given the flexibility, clear benefits, and speed of deployment these options provide. It is important that offerings remain minimal, but impactful. Automation and communication suites will be front and center, and if coupled with plug-and-play hardware, it will likely attract more willing enterprises. At this point, immediate, high ROI use cases among large enterprises with minimal hardware components will be the only ones able to justify the costs of deployment.
• Software, Cloud-Native, and Virtualization Products Must Become Top of Mind: Amid the uncertainty, intangible goods have become the safest bets for vendors across borders, as it reduces physical footprints and allows for more agile scaling. Vendors must accelerate product roadmaps in this domain, and potentially partner with existing hyperscalers, such as AWS and Azure, to host their virtualized RAN and core solutions. Enterprises already use cloud services in their operations, and gradual hardware decoupling will not only benefit them from a price perspective, but vendors as well.

Gain Clarity In Uncertain Times 

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