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WASHINGTON – A recent study linked to a major U.S. bank has unveiled that tariffs paid by mid-sized American businesses surged threefold last year. This finding adds to the mounting evidence that President Donald Trump’s strategy of imposing higher import taxes is stirring economic turbulence.
The rise in tariffs has forced companies, which collectively employ 48 million people across the United States, to strategize on managing these new financial burdens. These enterprises, which Trump vowed to bolster, now face tough decisions: transferring costs to consumers through price hikes, reducing their workforce, or absorbing diminished profits.
“This marks a significant shift in their business expenses,” commented Chi Mac, the business research director at the JPMorganChase Institute, which released the report on Thursday. “We are also observing signs that these companies might be pivoting their business away from China towards other Asian regions.”
While the report does not detail the specific economic impacts of these additional costs, it highlights that American businesses are bearing the brunt of the tariffs. This counters the administration’s narrative that foreign entities are responsible for paying these taxes.
Employing payments data, the JPMorganChase Institute’s analysis focused on businesses lacking the leverage of large multinationals to counteract tariffs but nimble enough to adjust supply chains swiftly. These firms, classified as “middle market,” typically generate revenues between $10 million and $1 billion and have fewer than 500 employees.
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.
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