S&P mentioned tariffs will value companies $1.2 trillion this yr, with shoppers bearing a lot of the burden

A shopper walks past shelves of cooking oils for sale at a supermarket in Beijing on Oct. 15, 2025.

Pedro Pardo | Afp | Getty Images

President Donald Trump’s tariffs will cost global companies more than $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 white paper released Thursday, the company said its estimate of additional costs to businesses was likely conservative. The price is based on information from approximately 15,000 sell-side analysts at 9,000 companies who contribute to S&P and its proprietary research indices.

“The causes of this trillion-dollar shortage are diverse. Tariffs and trade barriers act like taxes on supply chains, funneling cash to governments; logistics delays and freight costs compound the effect,” author Daniel Sandberg said in the report. “Together, these forces represent a systemic transfer of wealth from corporate profits to workers, suppliers, governments and infrastructure investors.”

In April, Trump imposed 10% tariffs on all goods entering the U.S. and imposed individual “reciprocal” tariffs on dozens of other countries. Since then, the White House has pursued a series of negotiations and agreements while also imposing tariffs on a variety of individual items such as kitchen cabinets, cars and lumber.

While government officials have insisted that exporters will be forced to bear the greater share of the duties, S&P analysis suggests that is only partially true.

In fact, the company says only a third is borne by businesses, with the rest falling on the shoulders of consumers, according to conservative estimates. The figures included $907 billion for covered companies, with the remainder coming from uncovered companies and private equity and venture capital.

“As real production declines, consumers are paying more for less, suggesting that this two-thirds share represents a lower bound on their actual exposure,” said Sandberg, who co-authored the report with Drew Bowers, a senior quantitative analyst at S&P Global.

Political and Political Interests

The scale of the tariff collapse and the burden of costs are crucial both for the White House, which wants to sell the tariffs as essential to restoring a fair trade balance, and for Federal Reserve policymakers, who want to calibrate the right balance for monetary policy.

“The President’s and administration’s position has always been clear: While Americans may face a transition period in which tariffs upend a broken status quo that has put America last, the cost of tariffs will ultimately be borne by foreign exporters,” White House spokesman Kush Desai said in a statement.

“Companies are already shifting and diversifying their supply chains in response to the tariffs, including by moving production to the United States,” he added.

Fed officials tended to view the tariffs as a one-time hit to prices rather than a source of underlying inflationary pressures. S&P researchers noted a similar sentiment among analysts.

The consensus is for a 64 basis point decline in profit margins this year, falling to 28 basis points in 2026 and 8 to 10 basis points in 2027-2028. One basis point is equal to 0.01%.

“In fact, 2025 was a hit; 2026 and 2027 will test whether the market’s optimism about rebalancing is justified,” the authors wrote. “For now, the consensus envisions a world in which margins eventually recover to pre-tariff levels. Whether this belief proves justified will depend on how companies adapt through technology, cost discipline and redesigned global value chains that have defined this cycle.”

The impact is also likely to depend on how Trump’s tariff strategy develops. The White House is currently again in heightened tensions with China over a dispute over rare earths and Trump’s retaliatory intentions.

The S&P paper noted that Trump’s removal of the de minimis exemption for goods under $800 in May was “the real turning point” in how harsh the tariffs would be. The exception made it possible for low-priced goods to travel under previous tariff barriers, but had “become politically untenable”.

“When the exemption ended, the shock spread to shipping data, earnings reports and executive comments,” Sandberg said.

“In the optimistic scenario that this turmoil is temporary, the Trump administration’s tariff agenda and resulting supply chain realignments are viewed as temporary tensions rather than permanent structural taxes on profitability,” he added.