A consumer walks previous cabinets of cooking oil on the market at a grocery store in Beijing on October 15, 2025.
Pedro Pardo | Afp | Getty Photographs
President Donald Trump’s tariffs will price international companies upward of $1.2 trillion in 2025, with a lot of the price being handed onto shoppers, in keeping with a brand new evaluation from S&P World.
In a white paper launched Thursday, the agency mentioned its estimate of extra bills for firms might be conservative. The value tag comes from info offered by some 15,000 sell-side analysts throughout 9,000 firms who contribute to S&P and its proprietary analysis indexes.
“The sources of this trillion-dollar squeeze are broad. Tariffs and commerce limitations act as taxes on provide chains and divert money to governments; logistics delays and freight prices compound the impact,” writer Daniel Sandberg mentioned within the report. “Collectively, these forces symbolize a systemic switch of wealth from company income to staff, suppliers, governments, and infrastructure buyers.”
Trump in April slapped 10% tariffs on all items coming into the U.S. and listed particular person “reciprocal” tariffs for dozens of different international locations. Since then, the White Home has entered a sequence of negotiations and agreements whereas additionally including duties on a wide range of particular person objects akin to kitchen cupboards, autos and timber.
Whereas administration officers have insisted that exporters might be compelled to bear the better share of the levies, the S&P evaluation suggests that’s solely partly true.
In reality, the agency says that simply one-third might be borne by firms, with the remainder falling on the shoulders of shoppers, beneath conservative estimates. The figures included a $907 billion hit to lined firms with the rest to uncovered companies in addition to personal fairness and enterprise capital.
“With actual output declining, shoppers are paying extra for much less, suggesting that this two-thirds share represents a decrease sure on their true burden,” mentioned Sandberg, who wrote the report together with Drew Bowers, a senior quantitative analyst at S&P World.
Political and coverage stakes
The scale of the tariff hit and the burden of the prices are essential each for the White Home trying to promote the duties as important to restoring a good commerce steadiness, and to policymakers on the Federal Reserve trying to calibrate the right steadiness for financial coverage.
“The President and Administration’s place has all the time been clear: whereas People might face a transition interval from tariffs upending a damaged established order that has put America Final, the price of tariffs will in the end be borne by overseas exporters,” White Home spokesman Kush Desai mentioned in an announcement.
“Firms are already shifting and diversifying their provide chains in response to tariffs, together with by onshoring manufacturing to the US,” he added.
Fed officers have been inclined to look by means of the duties as a one-time hit to costs and never a supply of underlying inflationary pressures. The S&P researchers discovered related sentiment amongst analysts.
The consensus appears to be like for a 64 foundation level contraction in revenue margins this yr, fading to twenty-eight foundation factors for 2026 after which 8 to 10 foundation factors in 2027-28. A foundation level equals 0.01%.
“In impact, 2025 locked within the hit; 2026 and 2027 will check whether or not the market’s optimism about re-equilibration is warranted,” the authors wrote. “For now, consensus envisions a world the place margins finally recuperate to pre-tariff trajectories. Whether or not that religion proves justified will rely upon how companies adapt by means of expertise, price self-discipline and reshaped international worth chains which have outlined this cycle.”
The affect additionally doubtless will rely upon how Trump’s tariff technique evolves. The White Home at present is again in heightened tensions with China over a uncommon earth dispute and Trump’s intentions to retaliate.
The S&P paper discovered that Trump’s removing in Might of the “de minimis” exception for items beneath $800 was “the actual inflection level” for the way onerous tariffs would chew. The exception had allowed low-priced items to sail beneath earlier tariff limitations, however “had grow to be politically untenable.”
“When the exemption closed, the shock rippled by means of delivery knowledge, earnings experiences, and govt commentary,” Sandberg mentioned.
“Within the optimistic situation that this turbulence is short-term, the Trump administration’s tariff agenda and the ensuing provide chain realignments are seen as transitory frictions, not everlasting structural taxes on profitability,” he added.
