Tariff costs to companies this year to hit $1.2 trillion, with consumers taking most of the hit, S&P says
President Donald Trump’s tariffs are expected to have a significant impact on global businesses in 2025, with costs totaling over $1.2 trillion, according to a recent analysis by S&P Global. The majority of these costs are likely to be passed on to consumers, as outlined in a white paper released by the firm.
The estimate of additional expenses for companies, based on data from thousands of sell-side analysts contributing to S&P’s research indexes, is considered conservative. According to author Daniel Sandberg, tariffs and trade barriers act as taxes on supply chains, leading to a transfer of wealth from corporate profits to various stakeholders such as workers, suppliers, governments, and infrastructure investors.
Since April, President Trump has imposed 10% tariffs on all goods entering the U.S. and has implemented reciprocal tariffs on products from other countries. While the administration has claimed that exporters will bear the brunt of these levies, S&P’s analysis suggests that consumers will also be significantly impacted.
The analysis indicates that only one-third of the costs will be absorbed by companies, with the remainder being passed on to consumers. This includes a projected $907 billion hit to covered companies, with the remaining costs affecting uncovered firms, private equity, and venture capital.
The implications of these tariffs extend beyond financial considerations. The size of the tariff impact and the distribution of costs are crucial for policymakers at the Federal Reserve and the White House. While the White House maintains that the costs will ultimately be borne by foreign exporters, companies are already adapting by diversifying their supply chains and even onshoring production to the U.S.
Federal Reserve officials view the tariffs as a one-time hit to prices rather than a source of underlying inflationary pressures. Analysts anticipate a contraction in profit margins in the short term, with some optimism for recovery in the following years through technological advancements, cost efficiencies, and reshaped global value chains.
The future impact of Trump’s tariff strategy remains uncertain, particularly in light of recent tensions with China over rare earth disputes. The removal of the “de minimis” exception for goods under $800 was a significant turning point, signaling a more substantial impact of tariffs on businesses.
Overall, the analysis suggests that the Trump administration’s tariff agenda and resulting supply chain disruptions may be temporary frictions rather than permanent structural challenges. The evolving nature of global trade dynamics will determine the long-term effects of these tariffs on profitability and consumer prices.
