Trump’s Tariffs to Cost Global Businesses More Than $1.2tn in 2025 – S&P Global

The U.S. Chamber of Commerce and business groups worldwide are grappling with a new era of trade economics as President Donald Trump’s sweeping tariff policy pushes global companies toward what analysts describe as a trillion-dollar squeeze.

According to a new white paper from S&P Global released Thursday, Trump’s tariffs will cost global businesses more than $1.2 trillion in 2025 alone, with most of that cost ultimately borne by consumers.

The report, based on analysis from more than 15,000 sell-side analysts across 9,000 companies, warned that the estimate was “probably conservative.” The authors, Daniel Sandberg and Drew Bowers, described the effect of the administration’s trade policy as a massive redistribution of wealth that will reshape profit structures and global supply chains for years to come.

“The sources of this trillion-dollar squeeze are broad,” Sandberg wrote. “Tariffs and trade barriers act as taxes on supply chains and divert cash to governments; logistics delays and freight costs compound the effect. Collectively, these forces represent a systemic transfer of wealth from corporate profits to workers, suppliers, governments, and infrastructure investors.”

A Global Cost Spiral

The $1.2 trillion hit comes after Trump imposed a 10% blanket tariff on all goods entering the United States in April, followed by a series of “reciprocal” duties on dozens of countries. Additional levies were placed on specific items such as autos, timber, and kitchen cabinets, adding to trade friction.

While the White House has insisted that foreign exporters will carry the brunt of the costs, S&P’s analysis challenges that assertion. The firm estimates that only one-third of the tariff impact will fall on companies directly, with the remaining two-thirds absorbed by consumers through higher prices. The report notes that this estimate could understate the true burden, as “real output declining means consumers are paying more for less.”

S&P’s breakdown shows $907 billion in costs hitting publicly listed firms, while private equity and venture-backed businesses will share the rest. The impact extends beyond direct trade disruptions, encompassing logistics bottlenecks, port delays, and new compliance costs as companies rush to adjust to shifting trade rules.

For the Trump administration, the policy marks a defining economic move — one aimed at reasserting U.S. manufacturing dominance while claiming to restore a “fair trade balance.” White House spokesman Kush Desai said the policy represents a necessary “transition period” toward a stronger domestic industry.

“The President and Administration’s position has always been clear: while Americans may face a transition period from tariffs upending a broken status quo that has put America Last, the cost of tariffs will ultimately be borne by foreign exporters,” Desai said. “Companies are already shifting and diversifying their supply chains in response to tariffs, including by onshoring production to the United States.”

However, economists warn that the policy’s domestic impact could complicate broader macroeconomic goals, especially as inflationary pressures remain a concern. Though Federal Reserve officials have largely regarded the tariffs as a one-time shock, not a lasting inflation driver, S&P’s data suggest the effects may persist longer than expected.

The firm’s analysts forecast a 64-basis-point contraction in corporate profit margins this year, with the damage gradually easing to 28 basis points in 2026 and around 10 basis points by 2028. The report cautions that while some companies may recover, others could face permanent erosion in profitability.

“In effect, 2025 locked in the hit; 2026 and 2027 will test whether the market’s optimism about re-equilibration is warranted,” Sandberg wrote.

The Supply Chain Rebuild

The tariffs are already forcing multinational firms to rethink sourcing strategies. From electronics and consumer goods to automotive manufacturing, companies are racing to mitigate the financial blow through supply-chain diversification and nearshoring.

Trump’s decision in May to eliminate the long-standing “de minimis” exception — which had allowed goods under $800 to enter the U.S. duty-free — marked what S&P described as the “real inflection point.” The removal sent shockwaves through shipping data and earnings reports, as low-cost items that once bypassed tariffs became subject to full levies.

“When the exemption closed, the shock rippled through shipping data, earnings reports, and executive commentary,” Sandberg said.

Some analysts have likened the situation to a structural reset in global trade. Whereas previous tariff rounds under earlier administrations focused on targeted industries, Trump’s blanket approach has reshaped the entire flow of goods, creating ripple effects from Asia to Europe. The rare-earth dispute with China — which escalated after Beijing hinted at restricting exports vital for tech and defense manufacturing — has only deepened tensions.

While some firms see the tariffs as an opportunity to strengthen domestic operations, others warn that the costs could hollow out smaller enterprises.

The Political Gamble

For Trump, the tariffs represent a political statement as much as an economic one — a test of whether protectionism can fuel domestic revival without destabilizing markets. The White House has framed the duties as a tool to “reclaim fairness,” but the global repercussions have been substantial.

The S&P report suggests that if the current trajectory continues, tariffs could become a quasi-permanent feature of global commerce, effectively acting as “structural taxes” on profitability. Sandberg said that “in the optimistic scenario that this turbulence is temporary,” supply chains will eventually stabilize and markets will rebalance. But if not, the world may enter a prolonged period where tariffs and trade barriers define the new normal.