How Trump’s Tariffs Will Cost Global Businesses $1.2 Trillion by 2025: What You Need to Know

President Donald Trump’s tariffs are projected to cost global businesses over $1.2 trillion in 2025, with the majority of this financial burden expected to be passed onto consumers, according to a new analysis from S&P Global. The firm’s conservative estimates indicate that companies will absorb only one-third of these costs, while the remaining two-thirds will fall on households.

Analysis Details

The estimate, detailed in a white paper released Thursday, is based on information provided by approximately 15,000 sell-side analysts across 9,000 companies that contribute to S&P’s proprietary research indexes. Daniel Sandberg, an author of the report, noted that “tariffs and trade barriers act as taxes on supply chains and divert cash to governments; logistics delays and freight costs compound the effect.” He described these forces as representing “a systemic transfer of wealth from corporate profits to workers, suppliers, governments, and infrastructure investors.”

The figures incorporate an estimated $907 billion impact on covered companies, with the remainder affecting uncovered firms, private equity, and venture capital. Sandberg, who co-wrote the report with senior quantitative analyst Drew Bowers, added that “with real output declining, consumers are paying more for less, suggesting that this two-thirds share represents a lower bound on their true burden.”

White House Response and Policy Context

White House spokesman Kush Desai stated that “while Americans may face a transition period from tariffs upending a broken status quo that has put America Last, the cost of tariffs will ultimately be borne by foreign exporters.” Desai also indicated that companies are already “shifting and diversifying their supply chains in response to tariffs, including by onshoring production to the United States.”

In April, President Trump implemented 10% tariffs on all goods entering the U.S. and established individual “reciprocal” tariffs for numerous other countries. Since then, the White House has engaged in negotiations and agreements, while also adding duties on specific items such as kitchen cabinets, autos, and timber. A key inflection point, according to the S&P paper, was Trump’s removal in May of the “de minimis” exception for goods under $800, which had previously allowed low-priced goods to bypass tariff barriers.

Economic and Monetary Implications

The magnitude of the tariff impact and the distribution of costs are critical considerations for the White House, which aims to present the duties as essential for restoring a fair trade balance. They are also significant for policymakers at the Federal Reserve, who are tasked with calibrating monetary policy. Fed officials have generally viewed duties as a one-time hit to prices rather than a source of persistent inflationary pressures.

S&P researchers found a similar sentiment among analysts, with a consensus expecting a 64 basis point contraction in profit margins this year, fading to 28 basis points for 2026 and then 8 to 10 basis points in 2027-28. The authors wrote that “2025 locked in the hit; 2026 and 2027 will test whether the market’s optimism about re-equilibration is warranted.” They noted that the market currently envisions a recovery of margins to pre-tariff trajectories, with the justification for this faith dependent on how firms adapt through technology, cost discipline, and reshaped global value chains.

Outlook

The S&P Global report underscores the substantial financial implications of President Trump’s tariff policies, forecasting a considerable cost to global businesses and consumers. While the White House maintains that foreign exporters will ultimately bear the burden, the analysis suggests a significant impact on domestic prices and corporate profitability, shaping both economic policy and corporate strategies in the coming years.