The Pulse #130: Google releases AI-powered IDE

The Pulse is a series covering insights, patterns, and trends within Big Tech and startups. Notice an interesting event or trend? Send me a message.

Today, we cover:

1. Industry pulse. Trump tariffs trigger disruption and economic uncertainty, Klarna halts IPO, Google joins companies embracing MCP protocol, GitHub Copilot Agent Mode and Code Review launches, Microsoft more cutthroat, and more.

2. Google releases AI-powered IDE. Firebase Studio is web-based, and offers a nice user experience. It offers a glimpse into full-stack, AI-assisted development – which will get better once initial kinks get ironed out.

3. Git turns 20. Linus Torvalds made the first commit to what would become Git almost exactly 20 years ago. The move was triggered by source control system BitKeeper disallowing the Linux kernel team to keep using this software – prompting Linus Torvalds to write an open source tool for the Linux kernel team to use.

4. New trend: AI cost-saving pressure at large dev agencies? A large developer agency told staff that several of their Big Tech customers are pushing for a 15-25% cost reduction in payments because they assume this much efficiency is gained from AI tools. This could turn into a self-fulfilling cycle of having to reduce staff by this much – unless they close more customers.

5. John Carmack on how AI will impact the industry and developer jobs. The co-creator of Quake believes AI tools allow the best developers to get a lot more done, plus allow smaller teams to accomplish more. Central to progress in computers has always been better tools: and LLMs are most likely this next wave of better tools.

1. Industry Pulse

Trump tariffs trigger disruption and economic uncertainty

Last week, the US stock market saw its biggest drop since 2008 and the global financial crisis, after US president Donald Trump imposed an average of 29% import tariffs on countries worldwide, ranging from 10% to 50% for most countries, and even more on China. Among countries hit hardest are Lesotho (50%), Cambodia (49%), and Vietnam (46%), with Taiwan getting 34%, Switzerland 31%, India 26%, Japan 24%, and the EU 20%. Predictably, China responded to being hit with a 104% tariff by imposing an 84% tariff on US imports, to which the US responded by escalating its tariff to 145%.

Adding to the uncertainty was an untrue claim by the Trump administration that the rest of the world levies tariffs of between 10% and 99% on the US. The method of calculation used by the US also had people scratching their heads; it seems they took the simple import surplus ratio as the basis, and even tariffed countries with whom the US has no trade deficit and which countries impose no tariffs on US goods.

For example, Australia imports more than twice as much from the US as it exports, and places no tariffs on US goods. So Australia neither imposes tariffs on the US, neither does the US have a trade deficit with the US ally. But Australia was still slapped with a 10% tariff. Meanwhile, a remote island uninhabited by humans whose only population is penguins has also been hit with 10%, on the basis it’s running a tariff regime that’s hurting the world’s biggest economy.

On Wednesday, with global uncertainty at its height and Republican politicians at home fearing the impact on US voters, Trump backed down and the US announced a 90-day pause on the new high tariffs, settling on a 10% global baseline figure, with 145% for China. The rest of the world now has around 3 months in which to figure out how to negotiate with the US. Bloomberg reports global trade is already slowing, with businesses cancelling overseas orders amid uncertainty about where tariffs will end up.

I mention all this because it matters to the tech industry, which could suffer collateral damage. Yes, the tariffs are on physical goods and not on services such as software or SaaS, but they will have a heavy economic impact, hitting consumers and businesses of all sizes. This includes higher costs and reduced spending across the economy, including cutting non-essential software investment. It is this that could hit tech’s software sector badly, in the context of a general loss of confidence caused by ongoing uncertainty about what will happen next.

There is a fair chance that this huge change will impact the tech sector just as much – or even more! – than the end of zero interest rates.

Still, the tech sector has the enviable advantage of software depending much less on physical goods; meaning that the present risks may be slightly less acute, and with more time to plan for changes ahead.

Klarna halts IPO