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President Donald Trump’s tariffs will cost global businesses upward of $1.2 trillion in 2025, with most of the cost being passed onto consumers, according to a new analysis from S&P Global.
The firm says that just one-third will be borne by companies, with the rest falling on the shoulders of consumers, under conservative estimates.
“While Americans may face a transition period from tariffs upending a broken status quo that has put America Last, the cost of tariffs will ultimately be borne by foreign exporters,” White House spokesman Kush Desai said in a statement.
A shopper walks past shelves of cooking oil for sale at a supermarket in Beijing on October 15, 2025.
Pedro Pardo | Afp | Getty Images
President Donald Trump’s tariffs will cost global businesses upward of $1.2 trillion in 2025, with most of the cost being passed onto consumers, according to a new analysis from S&P Global.
In a white paper released Thursday, the firm said its estimate of additional expenses for companies is probably conservative. The price tag comes from information provided by some 15,000 sell-side analysts across 9,000 companies who contribute to S&P and its proprietary research indexes.
“The sources of this trillion-dollar squeeze are broad. Tariffs and trade barriers act as taxes on supply chains and divert cash to governments; logistics delays and freight costs compound the effect,” author Daniel Sandberg said in the report. “Collectively, these forces represent a systemic transfer of wealth from corporate profits to workers, suppliers, governments, and infrastructure investors.”
Trump in April slapped 10% tariffs on all goods entering the U.S. and listed individual “reciprocal” tariffs for dozens of other countries. Since then, the White House has entered a series of negotiations and agreements while also adding duties on a variety of individual items such as kitchen cabinets, autos and timber.
While administration officials have insisted that exporters will be forced to bear the greater share of the levies, the S&P analysis suggests that is only partly true.
In fact, the firm says that just one-third will be borne by companies, with the rest falling on the shoulders of consumers, under conservative estimates. The figures incorporated a $907 billion hit to covered companies with the remainder to uncovered firms as well as private equity and venture capital.
“With real output declining, consumers are paying more for less, suggesting that this two-thirds share represents a lower bound on their true burden,” said Sandberg, who wrote the report along with Drew Bowers, a senior quantitative analyst at S&P Global.
Political and policy stakes
The size of the tariff hit and the burden of the costs are critical both for the White House looking to sell the duties as essential to restoring a fair trade balance, and to policymakers at the Federal Reserve looking to calibrate the proper balance for monetary policy.
“The President and Administration’s position has always been clear: while Americans may face a transition period from tariffs upending a broken status quo that has put America Last, the cost of tariffs will ultimately be borne by foreign exporters,” White House spokesman Kush Desai said in a statement.
“Companies are already shifting and diversifying their supply chains in response to tariffs, including by onshoring production to the United States,” he added.
Fed officials have been inclined to look through the duties as a one-time hit to prices and not a source of underlying inflationary pressures. The S&P researchers found similar sentiment among analysts.
The consensus looks for a 64 basis point contraction in profit margins this year, fading to 28 basis points for 2026 and then 8 to 10 basis points in 2027-28. A basis point equals 0.01%.
“In effect, 2025 locked in the hit; 2026 and 2027 will test whether the market’s optimism about re-equilibration is warranted,” the authors wrote. “For now, consensus envisions a world where margins eventually recover to pre-tariff trajectories. Whether that faith proves justified will depend on how firms adapt through technology, cost discipline and reshaped global value chains that have defined this cycle.”
The impact also likely will depend on how Trump’s tariff strategy evolves. The White House currently is back in heightened tensions with China over a rare earth dispute and Trump’s intentions to retaliate.
The S&P paper found that Trump’s removal in May of the “de minimis” exception for goods under $800 was “the real inflection point” for how hard tariffs would bite. The exception had allowed low-priced goods to sail under previous tariff barriers, but “had become politically untenable.”
“When the exemption closed, the shock rippled through shipping data, earnings reports, and executive commentary,” Sandberg said.
“In the optimistic scenario that this turbulence is temporary, the Trump administration’s tariff agenda and the resulting supply chain realignments are viewed as transitory frictions, not permanent structural taxes on profitability,” he added. More
The U.S. budget deficit edged lower for 2025 as record-setting tariff collections helped offset what also were unprecedented numbers for payments on the spiraling national debt.
The red ink would have been worse had it not been for a massive surge in customs duties and a September surplus of $198 billion that also set a record for the month.
The statue of former Treasury Secretary Albert Gallatin stands in front of the north wing of the U.S. Treasury Department headquarters building on April 24, 2025, in Washington, DC, U.S.
J. David Ake | Getty Images News | Getty Images
The U.S. budget deficit edged lower for 2025 as record-setting tariff collections helped offset what also were unprecedented numbers for payments on the spiraling national debt, the Treasury Department announced Thursday.
In a year marked by a bruising trade war and high financing costs, the federal government managed to escape with a $1.78 trillion shortfall, some $41 billion, or 2.2%, less than in fiscal 2024.
While that’s still on the high end historically, the red ink would have been still worse had it not been for a massive surge in customs duties and a September surplus of $198 billion that also set a record for the month.
President Donald Trump’s tariffs were a major contributor to tariff collections of $202 billion for the year, representing a 142% surge from 2024. September saw $30 billion in tariff payments, up 295% from the same period a year ago.
Treasury officials estimated Thursday that the dip in the budget shortfall will bring the ratio of deficit to gross domestic product to 5.9%. The measure has not been below 6% since 2022 and generally runs around the 3% area except in times of economic stress.
In an interview last week, Treasury Secretary Scott Bessent, noting Congressional Budget Office estimates that the deficit-to-GDP number would be below 6%, said “we’re on our way” to reducing the debt and deficit burden.
The impact from the deficit was felt in interest paid on the $38 trillion national debt.
Interest on the debt totaled more than $1.2 trillion, also a record and nearly $100 billion higher than the 2024 outlay.
Excluding interest that the Treasury earns on its investments, net interest payments totaled $970 billion, topping defense spending by $57 billion and behind only Social Security, Medicare and health care costs in the national budget.
Trump slapped controversial tariffs on U.S. imports earlier this year despite protests that they would spike inflation and hurt consumers, resulting in lower demand and a hit to economic growth.
While there have been signs of price increases in tariff-sensitive items, the moves have been mostly incremental. Federal Reserve officials say they likely will lower their benchmark interest rate further as they expect any price increases to be temporary. The current fed funds rate stands at 4.00% to 4.25%.
The government’s fiscal year ended in September, with the U.S. collecting $5.2 trillion in revenue over the prior 12 months while spending just over $7 trillion. More
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Swiss officials on Thursday downwardly revised their 2026 forecasts for economic growth, blaming the impact of U.S. tariffs.
Switzerland is currently subject to a U.S. tariff rate of 39%, making it one of the hardest hit countries by the Trump administration’s tariffs regime.
Charlotte de Montpellier, senior economist, France and Switzerland at ING, told CNBC that “risks are mounting” for the Swiss economy.
Untere Schleuse wooden bridge in Thun, Switzerland.
Education Images | Universal Images Group | Getty Images
Switzerland’s government on Thursday cut its 2026 economic forecast for the country, citing the Trump administration’s punitive tariffs as a “heavy burden” on its industries.
Officials held their forecast for the Swiss economy to expand by 1.3% this year, but noted that this level of economic growth was “significantly below-average” for the country. For next year, they are now forecasting gross domestic product (GDP) growth will slow to 0.9% – down from a previous 2026 forecast of 1.2% growth.
“Higher U.S. tariffs have further clouded the outlook for the Swiss economy,” officials said in a news release on Thursday.
Switzerland is an export-driven economy, and the U.S. was the top foreign destination for its goods in 2024. Back in August, Switzerland was hit with 39% tariffs on goods sent to the U.S. after a Swiss delegation failed to secure a deal with U.S. officials — one of the highest country-specific rates imposed by the Trump administration.
The country’s biggest exports include watches, pharmaceuticals and precious metals — but the country is also renowned for its luxury goods, chocolate and skincare products. Branded and patented pharma products are newly subject to 100% tariffs upon entry to the U.S., unless their manufacturers have or are building production facilities in America.
Switzerland is in a uniquely difficult position when it comes to tariffs. Here’s why
Swiss officials said in Thursday’s update that under current trade conditions, global demand for Swiss goods and services is expected to rise “only modestly” in the coming quarters.
“The current trade policy environment presents particular challenges for Switzerland,” they said. “The additional tariffs are placing a heavy burden on affected sectors and export-oriented companies, with significant ripple effects expected across the broader economy. Moreover, persistent uncertainty is also dampening economic activity.”
The government also warned that most of America’s other trading partners had been granted lower tariff rates, placing Swiss exporters at a competitive disadvantage in the U.S. market. White House trade policy held significant influence over the future trajectory of Switzerland’s economy, they said.
“If Switzerland were to reach an agreement with the U.S. or if international trade policy were to ease, a more favorable development would be expected,” they said. “Overall, however, downside risks currently dominate.”
Beyond Trump’s tariffs, demand for the Swiss franc is also adding to Switzerland’s economic and diplomatic woes, with the currency – typically seen as a safe haven asset in times of broader volatility – gaining more than 12% this year amid lingering uncertainty. The rising franc has created headwinds for the country’s central bank by putting downward pressure on prices as policymakers battle to avoid disinflation and negative interest rates.
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U.S. dollar/Swiss franc
Officials said on Thursday that the Swiss franc was continuing to play a role in Switzerland’s economic challenges – and cautioned that a further strengthening of the franc was possible.
“A deterioration in the international environment cannot be ruled out,” they said, noting that risks related to a market correction, global sovereign debt and the geopolitical landscape persisted.
“Should any of these risks materialize, further upward pressure on the Swiss franc would be expected,” they said.
Risks are mounting
Charlotte de Montpellier, senior economist, France and Switzerland at ING, told CNBC on Thursday that “risks for the Swiss economy are mounting.”
“Its exposure to the US market is big, amounting to 4% of GDP,” de Montpellier said in an email. “I estimate a cumulative direct impact of the current increase of US tariffs to 39% on Swiss GDP of about 0.86% in the first two years.”
De Montpellier recently revised her own growth forecast for Switzerland for 2026 down to 0.8% – almost half the growth rate she was forecasting at the beginning of this year.
“I believe that the risk are tilted to the downside and the likelihood of having a quarter of negative growth has strongly increased,” she said. “The Swiss economy, long buoyed by pharmaceutical exports, now faces a period of heightened uncertainty that will lead to a sharp deceleration of activity momentum.”
Swiss franc’s safe haven status is proving to be a headache for the nation
Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said on Thursday that the new forecasts from the Swiss government were in line with her own.
“A fall in goods exports, as indicated by monthly nominal goods trade figures, coupled with falling investment — in light of the surge in uncertainty and despite [Swiss National Bank] rate cuts, which will ultimately feed through to lower interest rates faced by firms — means we expect the Swiss economy to enter recession in the second half of this year,” she told CNBC via email. “We think Swiss GDP will fall by 0.2% quarter-to-quarter in both Q3 and Q4.”
‘Terrible news’ for companies
Speaking to CNBC’s Carolin Roth on Wednesday, Georges Kern, CEO of Swiss luxury watchmaker Breitling, labeled the U.S. tariffs “terrible news” for Switzerland.
“39% tariffs is horrible,” he said. “Still, I believe it will be solved. Swiss politicians are really understanding how to deal with businesspeople. The Trump administration, these are businesspeople, these are not classic politicians … But I’m confident that within the next couple of weeks there will be a much better solution than the 39%.”
Kern said that as the tariffs came into effect, Breitling had hiked prices globally to offset the impact, noting that luxury brands had more flexibility in this regard.
“[In] the U.S. we increased prices 4%, but also worldwide to balance the cost of the tariffs because you cannot just increase prices to the consumer by 39%,” he explained. “Thank god we have a certain pricing power at our price point, I don’t think it will impact us dramatically, actually we’re growing.” More
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