WASHINGTON – Tariffs implemented by the Trump administration are significantly impacting midsize U.S. Businesses, with tariff payments tripling over the past year, according to a new analysis from the JPMorgan Chase Institute. The findings suggest that these businesses, employing a combined 48 million Americans, are absorbing substantial costs through higher prices, reduced employment, or diminished profits.
The JPMorgan Chase Institute’s research, published on Thursday, , examined firms with revenues between $10 million and $1 billion and fewer than 500 employees – a segment known as the “middle market.” This sector was chosen due to its potential vulnerability to tariffs, lacking the pricing power of larger multinationals but also possessing the agility to potentially adjust supply chains.
Chi Mac, business research director at the JPMorgan Chase Institute, explained that the increased costs represent “a big change in their cost of doing business.” She also noted indications that these firms are beginning to diversify away from China, potentially shifting transactions to other Asian regions.
The study challenges the administration’s repeated assertion that foreign entities bear the cost of tariffs. The JPMorgan Chase Institute’s data indicates that U.S. Companies are directly paying the increased taxes, a conclusion supported by a growing body of economic analyses.
While the administration’s stated goal has been to reduce reliance on Chinese manufacturing, the data reveals a complex picture. Outflows from midsize U.S. Firms to China have decreased by approximately 20% since . However, this shift hasn’t resulted in widespread reshoring. Instead, companies appear to be redirecting their sourcing to other countries, including those in Southeast Asia, Japan, and India, incurring additional costs in the process.
The financial impact is substantial. Following the implementation of tariff rate increases and new universal tariffs in , monthly tariff payments by these midsize firms have tripled compared to early levels. This increase coincides with a period of heightened trade tensions and the administration’s aggressive pursuit of trade imbalances.
The White House dismissed the JPMorgan Chase Institute’s analysis as “pointless,” with spokesperson Kush Desai stating it “didn’t change the fact that President Trump was right.” This response underscores the administration’s continued defense of its tariff policies, despite mounting evidence of their economic consequences.
During a visit to Coosa Steel in Rome, Georgia, on , President Trump reiterated his support for tariffs, claiming they are “the greatest thing to happen to this country.” He also expressed disbelief that the Supreme Court would question the legality of some of his tariffs, arguing they are benefiting U.S. Manufacturers.
However, broader economic data paints a less optimistic picture. Despite the tariffs, the U.S. Trade deficit climbed by $25.5 billion to $1.24 trillion last year, according to data released by the Census Bureau on . The President has predicted a trade surplus this year, but this remains to be seen.
The administration’s claims regarding the benefits of tariffs have also faced criticism from within the economic establishment. Kevin Hassett, director of the White House National Economic Council, sharply criticized research from the New York Federal Reserve, which found that nearly 90% of the burden of Trump’s tariffs falls on U.S. Companies and consumers. He dismissed the New York Fed’s work as “an embarrassment” and suggested those involved should be “disciplined.”
The escalation of tariffs began last year, with the average tariff rate increasing to 13% from 2.6%. The administration justified these measures by citing national security concerns, particularly regarding steel, kitchen cabinets, and bathroom vanities. In , President Trump invoked an economic emergency to bypass Congress and impose a baseline tax on goods from much of the world, an event he dubbed “Liberation Day.”
The imposition of these high tariffs initially triggered financial market volatility, prompting the administration to temporarily walk back some rates before engaging in negotiations with various countries, resulting in a series of new trade frameworks. The Supreme Court is currently considering the legality of the President’s use of an economic emergency to justify the tariffs.
Beyond the direct financial impact, the tariffs are contributing to voter frustration over affordability. While inflation has not spiked during Trump’s term, hiring has slowed, and a team of academic economists estimate that consumer prices are roughly 0.8 percentage points higher than they would have been without the tariffs. This suggests that the administration’s trade policies are exacerbating cost-of-living pressures for American consumers.
The JPMorgan Chase Institute plans to continue studying the impact of tariffs on midsize businesses, recognizing that companies are still adjusting to the new trade landscape. The long-term consequences of these policies remain uncertain, but the initial data suggests a significant and costly disruption for a vital segment of the U.S. Economy.
