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WASHINGTON (AP) — According to recent research linked to a major U.S. bank, tariffs imposed on midsized American businesses have surged threefold over the past year. This development underscores the economic upheaval spurred by President Donald Trump’s strategy of imposing higher import taxes.
This increase in tariffs has forced companies, which collectively employ 48 million Americans, to navigate the added financial burden. Businesses that Trump pledged to bolster are now faced with difficult choices: they must either pass these costs to consumers through higher prices, reduce their workforce, or accept diminished profit margins.
Chi Mac, the business research director at the JPMorganChase Institute, which released the study, noted, “This represents a significant shift in their operational costs.” Mac added, “There are signs that some businesses might be pivoting away from China, considering other Asian regions for transactions.”
While the study does not detail the precise economic ripple effects, it does confirm that U.S. companies are bearing the brunt of these tariffs. This aligns with a growing body of economic studies that challenge the administration’s assertion that tariffs are shouldered by foreign entities.
The JPMorganChase Institute’s study analyzed payment data to focus on businesses that lack the pricing leverage of large multinationals but are nimble enough to potentially reconfigure supply chains to mitigate tax impacts. These businesses generally have revenues ranging from $10 million to $1 billion and employ fewer than 500 people, falling under the “middle market” classification.
The analysis suggests that the Trump administration’s goal of becoming less directly reliant on Chinese manufacturers has been occurring. Payments to China by these companies were 20% below their October 2024 levels, but it’s unclear whether that means China is simply routing its goods through other countries or if supply chains have moved.
The authors of the analysis emphasized in an interview that companies are still adjusting to the tariffs and said they plan to continue studying the issue.
The Trump administration has been adamant that the tariffs are a boon for the economy, businesses, and workers. Kevin Hassett, director of the White House National Economic Council, lashed out on Wednesday at research by the New York Federal Reserve showing that nearly 90% of the burden for Trump’s tariffs fell on U.S. companies and consumers.
“The paper is an embarrassment,” Hassett told CNBC. “It’s, I think, the worst paper I’ve ever seen in the history of the Federal Reserve system. The people associated with this paper should presumably be disciplined.”
Trump increased the average tariff rate to 13% from 2.6% last year, according to the New York Fed researchers. He declared that tariffs on some items like steel, kitchen cabinets and bathroom vanities were in the national security interest of the country — and declared an economic emergency to bypass Congress and impose a baseline tax on goods from much of the world last April at an event he called “Liberation Day.”
The high rates provoked a financial market panic, prompting Trump to walk back his rates and then engage in talks with multiple countries that led to a set of new trade frameworks. The Supreme Court is expected to rule soon on whether Trump surpassed his legal authority by declaring an economic emergency.
Trump was elected in 2024 on his promise to tame inflation, but his tariffs have contributed to voter frustration over affordability. While inflation has not spiked during Trump’s term thus far, hiring slowed sharply and a team of academic economists estimate that consumer prices were roughly 0.8 percentage points higher than they would otherwise be.