S&P: Trump’s tariffs to cost $1.2 trillion, consumers bear most of burden

S&P Global projects global tariff costs of $1.2 trillion in 2025.

• About two-thirds of that cost is expected to be passed on to consumers, not absorbed by companies.

• Tariffs act as de facto taxes on supply chains, diverting profits toward governments and logistics costs.

• S&P says the impact estimate is likely conservative given rising input costs and weaker output.

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S&P Global estimates that President Donald Trump’s tariffs will cost global businesses around $1.2 trillion in 2025, with consumers expected to bear the majority of the burden.

In a new white paper released Thursday, S&P said its figure is likely conservative, based on data from about 15,000 analysts covering 9,000 companies. The report found that only about one-third of the total cost will be absorbed by companies, while two-thirds will ultimately fall on consumers through higher prices and reduced output.

S&P analysts said tariffs and trade barriers effectively act as taxes on global supply chains, diverting resources toward governments, logistics costs, and infrastructure investments. “Collectively, these forces represent a transfer of wealth from corporate profits to workers, suppliers, governments, and infrastructure investors,” the report said.

Since April, the White House has introduced 10% tariffs on all U.S. imports and added targeted duties on items such as autos, timber, and kitchen cabinets. Officials argue the measures will shift the cost burden to foreign exporters, but S&P’s analysis suggests consumers are likely to face the largest impact.

Lead author Daniel Sandberg wrote that with real output declining, “consumers are paying more for less,” indicating that the consumer share of tariff costs may be even higher than current estimates.

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S&P’s trillion-dollar tariff estimate underscores the inflationary risk of U.S. trade policy and potential margin pressure on manufacturers. The findings suggest tariffs could weigh on global demand and complicate central-bank easing paths.

This article was written by Eamonn Sheridan at investinglive.com.