New S&P Global analysis shows consumers will bear most of the burden
A new white paper from S&P Global estimates that President Donald Trump’s sweeping tariff policies will cost global businesses more than $1.2 trillion in 2025, with most of that cost ultimately falling on consumers. The report draws from input by 15,000 sell-side analysts covering 9,000 companies in S&P’s research ecosystem.
“The sources of this trillion-dollar squeeze are broad,” said lead author Daniel Sandberg. “Tariffs act like taxes on supply chains, redirecting profits to governments while raising logistics and freight costs. The combined impact represents a massive transfer of wealth from corporations to consumers, governments, and infrastructure investors.”
One-third paid by companies, two-thirds by consumers
While the Trump administration argues that tariffs primarily target foreign exporters, S&P’s analysis paints a different picture. Only one-third of the burden falls on companies, with the remaining two-thirds hitting consumers through higher prices and reduced output.
S&P analysts estimate $907 billion in direct impact to listed companies, with the rest affecting private firms, venture capital, and uncovered sectors. “Consumers are paying more for less,” noted co-author Drew Bowers, pointing to a fundamental shift in purchasing power.
Political pressure and Fed reaction under scrutiny
The report raises the stakes for both the White House and the Federal Reserve. While administration officials maintain that the tariffs are necessary to restore fair trade, Fed policymakers have so far treated them as a temporary inflationary shock.
White House spokesman Kush Desai defended the tariffs, stating that the realignment of supply chains, including onshoring production, will ultimately benefit the American economy. “Americans may face a transition period, but the long-term burden falls on foreign exporters,” he said.
Margins squeezed, long-term adaptation key
S&P forecasts a 64 basis point drop in corporate profit margins in 2025, easing to 28 in 2026 and 10 by 2028. The authors note that whether margins return to pre-tariff levels depends on firms’ ability to adapt through tech, cost controls, and value chain shifts.
The biggest disruption came in May with the removal of the “de minimis” exemption for imported goods under $800, which had shielded many low-priced products from tariffs. The change sent shockwaves through earnings reports and shipping data, marking a true inflection point for the tariff regime.
“In the optimistic scenario, this is all just turbulence,” said Sandberg. “But if permanent, it could reshape global trade and compress corporate profits for years.”
