McGuireWoods Consulting senior vice president Ford Graham and vice president Steven Pearce were recently interviewed for an Area Development article titled “Around the Horn: Data Center Supply Chains — What’s Next?”
The interview touches on key questions regarding the data center supply chain, including topics such as how the industry will be affected by the tariffs, how governments are adapting to this booming industry and what aspects of the industry are the most complex.
Graham and Pearce emphasize to Area Development that the data center industry is experiencing a period of exponential growth. In response to this economic development, the government is adapting to these complexities.
“Metro areas are getting more skeptical, especially when it comes to job creation,” Graham said. “But rural areas still see data centers as high-value investments.”
The industry is also affected by a growing “not in my back yard” sentiment, according to Pearce. The increase of this posture towards data centers impacts incentives and influences state and local policy.
Some states like South Carolina and Georgia have taken to legislative initiatives to limit the availability of sales and use tax exemptions and long-term property tax incentives for these data centers.
Additionally, the interview touched on how the recent tariffs will affect components used in data centers like transformers, switchgear and uninterruptable power systems (UPS). These parts are often imported from Asia. However, the uncertainty felt by decisionmakers as a result of tariffs is not leading to immediate action. Many are evaluating new location options but are not moving quickly to finalize location decisions, due to expectation that policies at the federal level could be difficult to predict.
“If I’m a CEO, I don’t change course in a 90-day window,” Graham said. “Ten percent tariffs don’t justify it alone.”
Overall, Pearce maintains that in the future the main issues of energy and community impact will remain relevant. Graham emphasizes that while infrastructure funding may become an issue, it can also trigger innovative solutions.
“Demand will continue to grow, but location strategies will evolve,” the article writes. “The only certainty is change.”