Tariff costs to companies this year to hit $1.2 trillion, with consumers taking most of the hit, S&P says
A customer walks past shelves of cooking oils for sale at a supermarket in Beijing on October 15, 2025.
Pedro Pardo | Afp | Getty Images
President Donald Trump’s tariffs will cost global businesses up to $1.2 trillion in 2025, with most of the cost passed on to consumers, according to a new analysis from S&P Global.
In a technical report published Thursday, the firm said its estimate of additional spending for companies was likely conservative. The price tag comes from information provided by nearly 15,000 sell-side analysts at 9,000 companies that contribute to the S&P and its proprietary research indexes.
“The sources of this trillion-dollar squeeze are vast. Tariffs and trade barriers act as taxes on supply chains and divert cash to governments; logistics delays and freight costs compound the impact,” author Daniel Sandberg said in the report. “Collectively, these forces represent a systemic wealth transfer from corporate profits to workers, suppliers, governments, and infrastructure investors.”
Trump imposed a 10% tariff on all goods entering the United States in April and has listed individual “reciprocal” tariffs for dozens of other countries. Since then, the White House has entered into a series of negotiations and agreements, while also adding duties to individual items as diverse as kitchen cabinets, automobiles and lumber.
While administration officials insist exporters will have to absorb a larger share of the taxes, S&P analysis suggests that is only partially true.
In fact, the firm says conservative estimates suggest that only one-third will be borne by companies, with the rest falling on the shoulders of consumers. The figures include $907 billion in losses to covered companies, with the remainder at non-covered firms as well as private equity and venture capital.
“As real production declines, consumers are paying more for less, suggesting that the two-thirds share represents a lower end to their real burden,” said Sandberg, who wrote the report with S&P Global senior quantitative analyst Drew Bowers.
Political and political interests
The size of the tariff affected and the burden of costs are both important because the White House aims to sell the tariffs necessary to restore fair trade balance. Policymakers at the Federal Reserve try to set the appropriate balance for monetary policy.
“The President and the Administration’s position has always been clear: While Americans may face a transition period from tariffs that would upend the broken status quo that makes America Last, the cost of the tariffs will ultimately be borne by foreign exporters,” White House spokesman Kush Desai said in a statement. he said.
“Companies are already changing and diversifying their supply chains in response to tariffs, including shifting production to the United States,” he added.
Fed officials tended to view the taxes as a one-time hit to prices rather than as a source of inflationary pressures. S&P researchers found similar sentiments among analysts.
Consensus calls for a 64 basis point contraction in profit margins this year, falling to 28 basis points in 2026 and then to 8 to 10 basis points in 2027-28. Basis point equals 0.01%.
“In fact, 2025 is locked in target; 2026 and 2027 will test whether the market’s optimism about rebalancing is warranted,” the authors wrote. “For now, the consensus envisions a world in which margins will eventually return to pre-tariff orbits. Whether this belief proves justified will depend on how firms adapt through technology, cost discipline, and reshaping the global value chains that define this cycle.”
The impact will also likely depend on how Trump’s tariff strategy develops. The White House is currently in renewed tensions with China over the rare earth dispute and Trump’s intent to retaliate.
The S&P document found that Trump’s removal of the “de minimis” exception for goods worth less than $800 in May was the “real turning point” in how painful tough tariffs would be. This exception had allowed low-priced goods to pass under previous tariff barriers, but “had become politically untenable.”
“When the exemption ended, the shock rippled through shipping data, earnings reports and executive commentary,” Sandberg said.
“In the optimistic scenario that this turbulence is temporary, the Trump administration’s tariff agenda and resulting supply chain realignments are viewed as temporary frictions, not permanent structural taxes on profitability,” he added.
