Open Source: A hedge against tariffs and geopolitics
Note - This is my personal take. Not affiliated with any company or my current employer. Also, this is just a quick note rather than a well thought article. I will be expanding on this in the future. I am not a geopolitical expert. I am not an economist. I am not a lawyer. I am just a software engineer who is trying to make sense of the world around me. In no way this is a critique of US or China.
Context: Tarrifs and Geopolitics
These days POTUS has imposed insane tariffs across the world. 36% on China at the time of writing and threatening it to move to 50%. China is threatening to retaliate with ‘reciprocal tarrifs’. The world is moving towards a new tarrif-driven tech cold war.
The impact was global. The US markets were down by ~15% post tarrif news. It introduced a lot of uncertainty in the markets. Will it remain the same? Will it go up? Will it go down? The markets were in a state of flux.
So were the Indian markets. The Indian markets were down by ~5% post tarrif news. India and China were hit the least because of the huge domestic markets in contrast to export dependent countries like Vietnam, Japan, etc. However, we are very early to comment on the impact of tarrifs globally.
Indian IT companies were down by ~10% post tarrif news. The Indian IT companies are heavily dependent on the US markets.
It was not that people were not expecting it. The magnitude of the tarrifs was unexpected. Literally everyone was affected by it. Also, it will be hard to roll back the tarrifs.
reference - The Anatomy of a Crisis: Tariff Talk and Market Reaction!
Changing Global Order
The dominant theme that emerges is of a marking down of equity values to reflect a fundamental change in the global economic order. (Quote from Ashwath Damodaran)
The macro environment has become poker like. Tarrifs and Counter-tarrifs are the new normal. Outcomes can be an open trade war to a partial trade war to a complete tarrif-free world. The outcomes are uncertain and the markets are reacting to it. This is less about economics and more about game theory.
What does open source mean to me?
Anyone can use, study, modify, and share the software freely — with minimal or no restrictions.
Open Source: A hedge against tarrifs for China
For China, Open source is an offensive play.
Though IBM is the longest and arguably the most foundational Linux supporter on this list, Companies like Huawei, Alibaba, Baidu, Tencent, etc. are also on this list of Linux Supporters.
Most people knew about China open source after the deepseek event. However, the reality is that China has been investing in open source for a long time.
Open source is a hedge against tarrifs. It is a hedge against geopolitics. It allows companies to operate without worrying about paying 100x the price for a software license. From China’s perspective - Let’s support Linux because we may not get Windows!
Open source also allows China to play in the market without worrying about accusations of IP theft. US has accused China of IP theft in the past.
Open source is hyper-competitive. It is a hedge against monopolies. It is a hedge against tarrifs. It allows consumers to get best products at the best prices.
I have seen China being an extremely important contributor in Apache foundation projects both in terms of impact and number of contributors. The Chinese government is also investing heavily in open source.
If we pay attention to the list of sponsors for Apache foundation, we can see that the companies like Huawei are among the top backers of open source. Huawei is facing business-restrictions in the US.
David Nalley, the Chairman of the Apache Software Foundation, noted in a public speech that China’s contribution to Apache traffic had risen dramatically, exceeding 40%. Several open source projects have been started in China, and many of them are now being used by the Apache Software Foundation.
We can also take a look at CNCF sponsors.
It was because of Open source that we don’t have a monopolist in cloud computing. The tech stack is open source. Kubernetes, Docker, etc. are open source. The cloud providers are not able to charge 100x the price for a software license.
We can also see that RiscV is being heavily backed by Huawei and Alibaba. RiscV is an open source instruction set architecture (ISA) that is being used in a lot of new chips. It is a hedge against the US monopoly in chip design.
Open Source: Always a defensive play for US
Open source is a defensive play for US companies.
When Microsoft dominated operating systems, Linux emerged as the counterweight. When Oracle owned the database market, PostgreSQL and MySQL offered a community-led escape. When VMware ruled virtualization, Kubernetes shifted the game to container orchestration. Hence investment in open source is a defensive play for Big Tech US companies historically.
Big Tech does use open source to establish standardization. Google open-sourced TensorFlow to set standards in ML. Facebook released React to shape the frontend ecosystem.
We’ve seen this with OpenAI moving away from openness, Meta selectively open-sourcing LLaMA. LLaMA Fails at freedom 0, the freedom to use the model for any purpose, discriminates against users, restricts fields of endeavour. for more - https://opensource.org/blog/metas-llama-license-is-still-not-open-source.
We have seen Github blocking developers in countries facing US trade sanctions. Remember you can be sanctioned someday if US decides to sanction your country.
Conclusion
In no way am I saying that China is looking out for the world. They are looking out for themselves. They are looking to build a tech stack that is not dependent on US. They are looking to build a tech stack that is not dependent on US monopolies.
They have identified open source as their hedge and they are doubling down on it.
Also, this does not mean that US companies are not investing in open source. They are. But this post is more about Open Source as a strategic play rather than an ideological play.
Open source is no longer just a technical movement. It’s economic resilience, geopolitical strategy, and cultural identity-all rolled into one.
In a tariff-driven, IP-hostile, increasingly decoupled world: Open source is the last neutral ground.
And everyone - from engineers to policymakers - should pay attention.