New research indicates that tariffs imposed on imports by the Trump administration have significantly impacted midsized U.S. businesses, with costs tripling over the past year. This analysis, conducted by the JPMorganChase Institute, highlights that businesses employing around 48 million Americans have had to navigate these additional expenses, which can result in higher consumer prices, reduced hiring, or decreased profits.
Chi Mac, the director of business research at the JPMorganChase Institute, stated, “That’s a big change in their cost of doing business.” The study underscores a shift in transaction patterns, as firms appear to be moving away from dealings with China, potentially seeking alternatives in other Asian markets.
The report focuses on companies classified as “middle market,” which typically generate revenues between $10 million and $1 billion and employ fewer than 500 individuals. These businesses often lack the bargaining power of larger multinationals, making them more vulnerable to the financial impacts of tariffs. Despite the increased costs, it remains uncertain how these burdens are fully being absorbed in the broader economy. However, evidence suggests that these tariffs are indeed being paid by U.S. firms, contradicting the administration’s assertions that foreign entities bear the brunt of these taxes.
Among the key findings is a notable decline in payments to China, which have dropped by 20% compared to October 2024 levels. This reduction raises questions about whether U.S. companies are rerouting supply chains through different countries or actually shifting their manufacturing bases away from China.
The authors of the study emphasized the ongoing adjustments businesses are making in response to the tariffs and plan to continue monitoring these developments. In response to critical research, Kevin Hassett, director of the White House National Economic Council, expressed strong disagreement, labeling a study from the New York Federal Reserve as “an embarrassment” and a misrepresentation of how tariffs affect the U.S. economy.
Since last year, the average tariff rate has surged from 2.6% to 13%, following Trump’s initiative to label certain tariffs as necessary for national security and his unilateral declaration of an economic emergency. This increased rate prompted market volatility, leading to various trade negotiations and adjustments in tariffs with multiple countries.
As Trump gears up for re-election in 2024, he faces challenges related to inflation, which, while not sharply spiking, has contributed to voter dissatisfaction regarding affordability. Economic analysts suggest that consumer prices could be about 0.8 percentage points higher than they would have been without the tariffs, further complicating Trump’s economic agenda and his claims of benefiting American workers through these protective measures.
