View the San Francisco for Sunday, April 27, 2025
San Francisco’s tech companies wouldn’t immediately seem to be in the line of fire of the global trade war. After all, software and services businesses such as Salesforce, Uber, Reddit and Airbnb, along with a slew of artificial-intelligence and financial companies, dominate The City’s tech sector.
The tariffs that President Donald Trump has imposed or threatened, or those that U.S. trading partners are contemplating or putting in place in response, largely don’t touch those companies’ offerings. But even if tariffs won’t directly hit such companies, analysts said almost all of them are vulnerable to what could be the biggest indirect effect of the trade war riling countries, companies and markets around the world — an economic downturn. “Insofar as the global economy sinks into a recession — or the U.S. economy, even, sinks into a recession — will be affected by that, even if they’re not directly affected by tariffs,” said Gabriel Wildau, a China political-risk analyst for consulting firm Teneo. “And that is certainly a realistic outcome.” Numerous economists have warned in recent months there’s an increasing chance the U.S. will see an economic downturn as a result of Trump’s tariffs. The president — who campaigned on promises to hike tariffs nearly across the board to raise revenue, respond to allegedly unfair trade practices, encourage domestic production, and pressure trading partners to clamp down on immigration or the illegal drug trade — has announced numerous new impositions since taking office, including on steel, aluminum, cars and car parts. Sam Altman, chief executive of OpenA!, speaks at a White House event with President Donald Trump, left; Softbank chief executive Masayoshi Son, third from left; and Larry Ellison, chairman of Oracle, at the White House on Jan. 21, 2025. Earlier this month, on what he called “Liberation Day,” Trump announced a minimum 10% tariff rate on nearly all imports worldwide and new tariff rates on a slew of countries that have trade surpluses with the United States, including a rate of 145% on most goods from China. Although Trump paused some of those tariffs to allow time for negotiations or adjustments, some have already kicked in, and the president has threatened to put in place tariffs on products that he has previously exempted — Other countries have responded by either threatening or enacting tariffs of their own against U.S. products. “Economists disagree on many things,” said Justin Rietz, an economics professor at San Jose State University. “One of the few things there’s almost general consensus among all economists is tariffs are harmful to your economy.”in the U.S. this year, up from 25% before, and it cut its forecast for the country’s economic growth for the year from 2.7% to 1.8%.President Donald Trump speaks to reporters before boarding Air Force One at Joint Base Andrews, Md., on his way to Florida, March 14, 2025. Before Trump announced his “Liberation Day” tariffs, the Eurasia Group looked at how it would affect the U.S. economy if he raised tariffs to an average 15% rate, said Xiaomeng Lu, director of its geotechnology practice. The consulting firm estimated the economic reaction would be similar to the initial COVID-19-related downturn, when governments put in place lockdowns to try to prevent the disease from spreading. But the rates Trump announced were even higher than the Eurasia Group modeled — around an average of 25%, Lu said. That’s a level the U.S. hasn’t seen in nearly a century.Given that Trump has gone back and forth on them, announcing tariffs then pausing them or granting exemptions, it’s unclear whether those tariffs will actually take effect. And at least some analysts are betting the trade war fizzles out without causing too much damage. “I kind of think that this is all going to be relatively short-lived,” said Dan Romanoff, a stock analyst who covers Salesforce and other software companies for Morningstar, a financial research firm.slapped tariffs on numerous countries and products . While he later struck deals that removed or reduced some of those impositions, others were still in place when he left office. Assuming he doesn’t reach deals this time around and his “Liberation Day” tariffs do take effect, they’ll likely undermine the economy, which will harm local tech companies, analysts said. “It’s hard to see that most companies won’t be at least indirectly affected by such a downturn,” said Alex Field, an economics professor at Santa Clara University. That said, just how hard companies get hit by a recession will likely vary significantly from business to business, analysts said. Companies that are most dependent on discretionary consumer spending will likely see the most harm, they said. That’s because consumer spending is the biggest part of the economy, and consumers typically rein in their spending in response to recessions. In San Francisco, food-delivery services such as DoorDash and Uber’s Uber Eats could take significant hits to their sales, said Mark Giarelli, a Morningstar stock analyst who focuses on such companies as well as other businesses in the tech sector. Companies, particularly those that cater to consumers, tend to cut their advertising spending during downturns. So tech businesses that rely on advertising could be especially vulnerable in a downturn, said Shay Wester, director of Asian economic affairs at the Asia Society Policy Institute, a think tank. Uber and Lyft’s ride-hailing businesses could also see a sales slowdown in a recession to the extent that the people using them see them as a discretionary expense, Field said. But ride-hailing should be less vulnerable to a downturn than food-delivery services because many customers see it as a kind of indispensable utility, Giarelli said.A rides-hailing driver heads down Fourth Street in downtown San Francisco on Wednesday, Aug. 25, 2021. Uber and Lyft’s ride-hailing businesses could also see a sales slowdown in a recession, to the extent users see them as a discretionary expense, said Alex Field, an economics professor at Santa Clara University.Companies such as Salesforce that offer software for other businesses are also likely to be somewhat insulated. Frequently, customers of such software consider it to be crucial to their operations. Even if they wanted to reduce their spending on it — because they laid off staff, for instance — they usually have signed longer-term contracts that can’t be cancelled or altered right away, Romanoff said. Based on what’s happened in past recessions, a tariff-induced downturn likely won’t result in a drop in Salesforce’s revenue, Romanoff said. Instead, such an event might reduce its sales growth by about 3 to 4 percentage points; so, instead of growing by about 9%, it might grow at a 5% or 6% rate, he said. It’s unclear how San Francisco’s artificial-intelligence companies such as OpenAI would fare in a recession, analysts said. They’re not necessarily going to be hit like companies offering consumer products will be, Field said, but it depends a lot on how customers view their services.OpenAI representatives did not respond to a request for comment.UCSF and Gladstone Institutes researchers are expecting their research into COVID antivirals to hit a wall next month after the National Institute of Allergy and Infectious Diseases terminated the remaining two years of a five-year grant in March.San Francisco research into the development of potential drugs to treat the virus causing COVID-19 is facing an uncertain future following last month’s cancellation of a yearslong federal grant covering the funding. UCSF and Gladstone Institutes researchers say their work is expected to grind to a halt next month in the wake of the National Institute of Allergy and Infectious Diseases terminating the remaining two years of a five-year grant worth around $67 million in March. “We were hitting on all six cylinders,” said Charles Craik with UCSF, co-lead author of a study published Wednesday in the peer-reviewed journal Science Advances highlighting the effectiveness of “You enjoy the ride as best you can and make hay while the sun is shining, and now the sun’s not shining,” Craik said. Craik said NIAID — which falls under the National Institutes of Health and its parent agency, the U.S. Department of Health and Human Services — canceled the grant on March 23.for nine Antiviral Drug Discovery Centers for Pathogens of Pandemic Concern, a $577 million initiative under the administration of former President Joe Biden to help develop new drug treatments with an eye on future pandemics. “The industry had lost interest in it because the pandemic was winding down,” Craik said of the center’s founding. “They’re not going to make a drug on the chance of the next pandemic coming around.” NIH is ending such grants to “terminate research funding that is not aligned with NIH and HHS priorities,” according to a statement the agency shared with The Examiner on Thursday. “As we begin to Make America Healthy Again, it’s important to prioritize research that directly affects the health of Americans,” the statement said. “We will leave no stone unturned in identifying the root causes of the chronic disease epidemic as part of our mission to Make America Healthy Again.”and cuts to medical research. NBC News reported on March 25 that the Centers for Disease Control and Prevention, which also falls under HHS, would pull backflu deaths had outpaced COVID-19 fatalities Craik said he and his fellow researchers focused on identifying a molecule that would block the main protease — an enzyme that acts like a pair of scissors to slice up proteins and is vital to viral replication — of the virus causing COVID-19. The researchers’ tests in petri dishes and mice identified a pair of molecules — AVI-4773 and AVI-4516 — fitting that enzyme like “a key goes into a lock” that “sticks in there and keeps the scissors from working,” Craik said. The authors wrote that “AVI-4516 and AVI-4773 manifest many differentiated properties that augur for the discovery of development candidates,” with both showing a “rapid reduction” of the concentration of infectious viral particles within three doses. That “suggests the potential for more convenient, less frequent dosing regimens” than existing antivirals like Paxlovid and might extend the window for effective treatment of infection,” they wrote. The authors also wrote that additional “preclinical assessment will be required to predict a human dose and to determine optimal dosing regiments of AVI-4773,” which they said was the more promising of the two molecules. “We had never seen this, that a drug would work so fast and so complete in the suppression of the virus circulation,” said Dr. Melanie Ott — a Gladstone Institutes virologist and the study’s co-lead author — of the testing on mice. The researchers also tested the molecules against coronaviruses causing Middle East Respiratory Syndrome and Severe Acute Respiratory Syndrome, with findings suggesting AVI-4516 “could serve as effective pan-coronavirus .” “The goal of what we’re doing is not to treat COVID-19 or one single virus,” she said. “We’re looking specifically for platforms and for molecules that can be used also for other viruses.” Ott said the identified compounds have not yet undergone clinical testing in humans, which is one of many required steps before receiving Food and Drug Administration approval. But absent more funding, Craik said the future of their research is unclear. Craik said the researchers have sought out separate funding sources, such as the Gates Foundation. But even though none will come close to replicating the federal grants, he said, it’s vital that their work continue. Coronaviruses causing COVID-19, SARS and MERS can infect “Republicans, Democrats, independents, everybody,” Craik said. “Maybe it’s not infecting folks now, but it will at some point, and so you just keep going.” Sam Altman is CEO of OpenAI, one of many Bay Area technology companies that could be adversely affected by the trade war currently being waged by the federal government.Sam Altman is CEO of OpenAI, one of many Bay Area technology companies that could be adversely affected by the trade war currently being waged by the federal government.Click and hold your mouse button on the page to select the area you wish to save or print. You can click and drag the clipping box to move it or click and drag in the bottom right corner to resize it. When you're happy with your selection, click the checkmark icon next to the clipping area to continue.This is the name that will be displayed next to your photo for comments, blog posts, and more. 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