Tariffs, Skills Shortages, and Geopolitics Threaten Datacenter Growth Amid AI Surge

Tariffs and Trade Turmoil Driving Up Cost and Build Times for Datacenters

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Datacenter operators in Northern Europe report that US tariffs and global geopolitical instability are pushing up costs and causing delays in construction projects. Demand for rackspace has surged in the last couple of years, fueled by AI infrastructure needs to train larger models.

A survey of 250 senior decision makers from the UK, Ireland, and Nordic countries by datacenter specialist Onnec reveals AI workloads have increased by an average of 42 percent in the past year. Nearly two-thirds of operators say AI support demands exceeded expectations, stretching the capacity of both existing and planned facilities.

Operators face challenges from skills shortages, geopolitical uncertainty, and complex design requirements. This poses a concern for UK policymakers who want to accelerate datacenter construction to support AI development but may have more immediate priorities.

Regarding tariffs, 69 percent of respondents highlighted the US administration's inconsistent tariff policies, alongside other geopolitical issues, as factors increasing costs and delays. Earlier this year, system builders warned tariffs would likely push server prices higher, while financial analysts noted supply chain headaches due to equipment components coming from multiple sources.

"The AI race is global, but protectionist policies are forcing operators to make cost-based decisions that limit infrastructure quality," said Onnec Nordics General Manager Niklas Lindqvist. Over half of operators expect the AI surge to shorten datacenter lifespans because demanding AI workloads exceed existing power, cooling, and bandwidth capacities.

Nearly 74 percent of operators have had to rethink power, cooling, and location strategies to build AI-ready facilities. This has already affected major players: Microsoft reportedly canceled some US datacenter leases earlier this year, not due to overestimation but to reassess sites that meet power and cooling needs.

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Google plans to buy power from fusion energy startup Commonwealth—if fusion can be made commercially viable. The industry is moving toward datacenters built for longevity and flexibility. The report notes, "Operators need to ensure datacenters have dynamic capacity when operational."

Global real estate firm Savills reports that datacenter construction costs in Europe rose 6.5 percent on average in 2024, reaching $9.1 million per megawatt. Zurich, London, and Frankfurt are the priciest cities for such builds. Major cost drivers include land, building shells, electrical systems, HVAC, mechanical work, and cooling.

Skills shortages compound these challenges. About 79 percent of survey respondents point to a lack of specialist engineers as a likely cause of construction delays. This shortage could force operators to scale back or postpone projects, turning intended state-of-the-art facilities into less efficient builds.

Lindqvist emphasizes that addressing these issues and controlling costs is essential to delivering AI infrastructure that meets long-term needs.

Onnec also highlights cabling as a critical but often overlooked weak point. The report finds 70 percent of operators agree poor cabling can degrade performance and resilience, with 27 percent citing shortages of skilled personnel for installation and maintenance.

• Geopolitical tensions and tariffs are inflating costs and delaying datacenter builds.
• AI demand is pushing existing infrastructure beyond power and cooling limits.
• Construction costs in Europe are rising, especially in major cities.
• Skills shortages threaten project timelines and quality.
• High-quality cabling and infrastructure maintenance require more skilled workers.

For professionals in real estate and construction, these trends mean planning for higher costs, longer timelines, and the need for specialized expertise when working on datacenter projects. Staying informed about tariff developments and geopolitical risks is crucial for accurate forecasting and risk management.

Those interested in learning more about AI infrastructure and related skills can explore resources at Complete AI Training.