Over the past decade, hyperscaler cloud providers have earned their customers’ trust — an achievement they can take pride in. Many large enterprises and small startups now rely on them to host mission-critical workloads. Prices have generally fallen over time, and while there have been outages, most were relatively short-lived (see Outage data shows cloud apps must be design for failure). Crucially, there have been no significant security breaches within the hyperscalers’ infrastructure. With the exception of some AI-backed instances, customers have historically had ready access to resources, enabling them to spontaneously scale their applications with changing demand.

This trust has been established through sustained performance rather than through financial assurances. Service level agreements mean little in practice — the compensation offered during an outage is minimal compared with the actual loss incurred. Moreover, compensation is only paid out on the failed services, not the whole application. There is also no compensation for security breaches, poor performance, or other metrics (see Cloud SLAs punish, not compensate).

Customers in European countries — typically more conscious of data sovereignty than others — have put their faith in hyperscaler cloud providers. With the exception of Alibaba, all hyperscalers (i.e., very large cloud providers) are American: AWS, Google Cloud, Microsoft Azure, Oracle Cloud and IBM Cloud. European customers have generally regarded American cloud providers as stable, reliable and secure — while Chinese cloud providers are perceived as less so.

However, in recent months, sweeping changes by the US administration have rocked European and global confidence in the US. As a result, trust in the US hyperscaler clouds is, for the first time, now being questioned.

In this report, Uptime Intelligence focuses on European countries' relationships with US cloud providers, although the arguments likely apply to other countries as well.

Tariffs: short-term impacts

In March and April 2025, the US government announced or implemented a range of tariffs on imports. At the time of writing, most of the more severe and disruptive tariffs — and by extension, reciprocal tariffs from other countries — have been paused for 90 days to allow negotiations to take place (see Tariff recap below).

During these 90 days, Uptime Intelligence expects a range of actions from cloud providers and their customers in either the US or beyond:

• Limited initial price rises. Cloud providers rely on original design manufacturers (ODMs) in Taiwan and China for chip and server manufacturing, and price increases for these components, caused by tariffs, are difficult to absorb. For the time being, cloud providers will likely hold prices steady, absorbing any increases in costs through reduced margins or by using existing hardware stocks that predate the tariffs. However, if tariffs on server equipment are introduced, prices will likely go up. A tariff exemption on semiconductors offers little relief for hyperscalers if those chips are packaged into cards or servers that are then subject to tariffs. In such cases, providers will likely pass on increased costs to customers.
• Migration reconsideration. Corporate customers and governments might pause or slow their migration to the public cloud as they await the outcome of these tariffs. There is concern that prices may increase, either due to tariffs on cloud provider hardware or, at some point, on digital services. While there are currently no tariffs on services, if the US government were to introduce them and countries retaliated, costs could rise further. Due to the consumption model nature of the public cloud, any price increase can have a substantial impact on recurring operating expenses for customers. In addition, many cloud providers use proprietary technologies, which make it difficult for customers to switch providers if prices increase.
• Repatriation floated. More cautious cloud customers — particularly those in countries with a strained relationship with the US — may be working on an exit strategy as a last resort, in case they need to migrate away from their existing providers.
• Data center pause or slowdown. Cloud providers may pause investments in new data centers and capacities due to the uncertainties around tariffs. Without clarity, reliable business planning becomes difficult. A slowdown in new capacity could have an impact on customer access to cloud services in some regions (see The booming data center sector grapples with tariff chaos).
• Supply chain reevaluation. Cloud providers are assessing a wide range of scenarios, including whether supply chains can be moved or rerouted to mitigate the impact of tariffs.

Longer-term impacts

In such an unprecedented time, predicting how this will play out beyond the next 90 days is almost impossible. However, the longer-term impact on the public cloud lies in the instability — and erosion of trust — it causes.

This marks a major change. Europeans have long trusted US hyperscalers because of their similar values: institutional stability, a history of trade, enduring partnerships and alliances, and relatively stable currencies. Now, all of these are subject to change. Some issues of concern are:

• Currency fluctuations. Many hyperscalers charge exclusively in US dollars. As a result, customers, not cloud providers, bear the risk of volatility in currency exchange rates.
• Tariff instability. Amid so much turmoil, many European customers may fear that their mission-critical workloads are trapped and vulnerable to unpredictable costs. If new tariffs are introduced — particularly on services or software — European customers could find themselves locked into the cloud provider, unable to move and forced to pay a premium. Even if current tariffs are renegotiated, there is no guarantee that new ones will not be introduced over the longer term.
• Penalized for using US products. European organizations that purchase servers from China or Taiwan will not be subject to the same tariffs as their US counterparts. However, if US-based cloud providers pass on tariffs to their European customers, those customers will effectively pay a premium purely because they are using a US-based provider. This premium would not apply if they used a European provider.
• The rule of law. US legislation such as the CLOUD Act allows US authorities to compel US-based entities to provide personal data, even if that data is held in Europe. Although the CLOUD Act has been controversial, it includes many security safeguards in practice and cannot be used for mass surveillance or without a court order. However, recent criticism of European allies by the Trump administration has heightened concerns. Some customers worry that such legislation may be used by the US government to access confidential data.
• Capacity and growth. If timely shipments of servers are delayed, cloud customers may struggle to access capacity in their desired regions. This can prevent their applications from scaling to meet demand and performance requirements.

Outlook

No one can predict exactly how the current turmoil around tariffs will unfold — although some large companies in the data center sector are modeling and preparing for various scenarios. Regardless, the relationship between the US and its allies has changed. Non-US cloud buyers are likely to consider US cloud providers with less certainty and confidence than they did just a year ago.

This is not an existential threat to the hyperscalers. They are very good at what they do: offering immense scalability, a globally connected footprint and dozens of services in millions of variations. There is no evidence, at this point, of any tariff-related defections from the public cloud.

However, enterprises are likely to be more cautious. Many organizations already use multiple cloud providers alongside colocations and their own facilities. In the current climate, some customers might now decide to keep workloads in their own facilities rather than the public cloud until the dust settles. Others may choose to build their own private cloud in their own data center using technologies from vendors such as OpenStack, VMware, Cisco, IBM, Dell, HPE or Nutanix rather than risk public cloud (Uptime Intelligence will publish a report on public, private and hybrid cloud models in April/May 2025).

This uncertainty provides an opportunity for sovereign clouds — cloud providers with no US connections — where data, management and support teams are all based locally. These include Civo, Scaleway, OVHcloud, UpCloud, Exoscale, IONOS, Gridscale, Fuga Cloud, T-System’s Open Telekom Cloud and Aruba. These companies are far less likely to be affected by US-foreign relations than hyperscalers. However, the downside is that many of these smaller cloud providers offer a limited range of services, in fewer regions, than the hyperscalers.

European cloud providers have attempted to create alliances with other European providers, including HPE Cloud28+, Gaia-X and recently NeoNephos, with limited success.

In conclusion, the most significant impact of the recent volatility is lasting uncertainty. Customers trust their cloud provider to deliver on price, capacity, security and availability. Instability makes it more challenging for a cloud provider to deliver on its promises.

Hyperscalers will continue to be titans of the cloud industry and play a significant part of many enterprise estates. However, some customers will be more cautious than before. Many will continue to utilize a mix of colocations, their own data centers and sovereign clouds to spread their risk.

Tariff recap

Tariff’s applied by the US and other nations are changing constantly. The analysis in this report assumes that this volatility will continue in its unpredictability — but will settle during 2025. Our analysis takes this into account, as much as is possible. At time of writing (mid-April 2025), the situation (excluding previously existing and long-established tariffs) is:

• Importers of goods from all nations into the US must pay a new 10% baseline tariff.
• Certain goods, such as semiconductors, copper, lumber, pharmaceuticals, bullion and energy, are exempt from import duties.
• Importers of goods from Canada and Mexico will pay 25% import duty, except those covered by the US-Mexico-Canada Agreement 2020. Products are exempt if they are largely sourced or are substantially assembled or manufactured in North America.
• Steel and aluminium imported into the US carry a 25% tariff. Copper and timber may be added to this list.
• The US and China are engaged in a reciprocal tariff war, with each charging 125% (or more) to import goods from the other. Certain goods, such as smartphones and some electronic components, have been exempted. The current situation is not considered stable or sustainable and is likely to change.
• Higher tariffs on goods from approximately 60 nations into the US may be introduced in July 2025 (following a 90-day pause) unless bilateral agreements are reached — leading to reciprocal tariffs. Again, these dates and tariff levels are highly likely to change.
• Tariffs between other countries, mostly covered by trade agreements, may also change as the impact of US tariffs takes effect and nations attempt to protect their own economies.