A new S&P Global analysis warns that President Donald Trump’s sweeping tariff agenda will impose as much as $1.2 trillion in costs in 2025, with roughly two-thirds passed directly on to U.S. consumers.
The analysis showed that foreign exporters or corporations will not bear the brunt of the costs, according to CNBC.
S&P Global projects that only about one-third of the tariff burden will fall on companies; households may shoulder the rest.
Under its calculations, covered firms absorb a $907 billion hit, while the remainder weighs on uncovered firms and private equity interests.
“Consumers are paying more for less … this two-thirds share represents a lower bound on their true burden,” the report states.
The analysis, based on input from 15,000 sell-side analysts across 9,000 firms, calls its $1.2 trillion estimate “conservative,” reported TipRanks.
S&P claimed that tariffs and trade barriers act as hidden taxes on supply chains, with logistics delays and increased freight costs compounding the burden.
Meanwhile, in late September, S&P Global projected U.S. GDP growth of 1.9% in 2025 and 1.8% in 2026, slightly higher than previous estimates but below recent trends.
White House spokesman Kush Desai stood by the administration’s positions, saying, “While Americans may face a transition period … the cost of tariffs will ultimately be borne by foreign exporters.”
He added that many companies are adjusting supply chains and “onshoring” production to the U.S. in response.
The Trump administration maintains that these trade measures are necessary to counter unfair foreign trade practices and to rebalance supply chains in America’s favor.
S&P estimates that corporate profit margins will contract by 64 basis points this year, easing to 28 basis points in 2026 and 8 to 10 basis points in 2027–28.
“In effect, 2025 locked in the hit; 2026 and 2027 will test whether … margins eventually recover to pre-tariff trajectories,” the report warns.
Many analysts and Fed officials appear willing to treat the tariff effects as a one-time shock to prices, not a long-term inflation driver. The consensus outlook assumes margins will rebound over time as firms adjust via technology, cost discipline, or supply-chain realignment.
S&P claims that the end of the “de minimis” exemption in May, which allowed imports under $800 to be tariff-free, marked the beginning of tariffs significantly affecting U.S. businesses and consumers.
“When the exemption closed, the shock rippled through shipping data, earnings reports, and executive commentary,” the authors wrote.
The administration claims the move was needed politically, but it made tariff costs more apparent in consumer prices.
The magnitude and distribution of tariff costs are of deep importance to the Trump White House, which is promoting the duties as a tool to restore “fair” trade.
For Federal Reserve policymakers, the question is whether the price pressures will settle or become embedded in inflation expectations.
The fallout also depends in part on how aggressively the administration uses its tariff arsenal in escalating trade tensions — especially with China over rare earths — or whether it scales back aggressively.
If consumers begin to bristle at potentially rising costs, the political blowback could spell trouble for the administration’s trade strategy.
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