US Mid-Size Businesses Face Soaring Tariff Costs, Tripling Payments in One Year
Tariff payments by midsize US businesses have surged threefold over the past year, according to new research released on Thursday by the JPMorganChase Institute. The study, cited by the Associated Press, highlights significant economic strain linked to President Donald Trump's tariff policies, affecting companies that employ a combined 48 million people across the nation.
Mounting Cost Pressures Force Business Adaptations
These businesses, often highlighted in Trump's economic messaging, are grappling with escalating cost pressures. To cope, firms have been compelled to raise prices, reduce hiring, or absorb impacts through diminished profit margins. Chi Mac, business research director at the JPMorganChase Institute, noted, "That's a big change in their cost of doing business." He added that there are indications of a shift away from transactions with China toward other regions in Asia.
Report Challenges Administration's Claims on Tariff Burden
The report clarifies that US firms are bearing the tariff payments, contradicting the administration's assertion that the burden falls primarily on foreign exporters. Researchers analyzed payments data from businesses within the "middle market" bracket, typically with annual revenues of $10 million to $1 billion and workforces under 500 employees. These companies lack the pricing leverage of large multinationals but retain flexibility to reconfigure sourcing strategies.
Progress Toward Reducing Dependence on Chinese Manufacturing
Data suggests progress toward one of the administration's objectives: reducing direct reliance on Chinese manufacturing. Payments to China from these firms were approximately 20% below October 2024 levels. However, the study cautions that these figures alone cannot confirm whether supply chains have genuinely shifted or if goods are merely being rerouted through intermediary countries.
White House Dismisses Findings Amid Ongoing Adjustments
White House deputy press secretary Kush Desai dismissed the findings as "pointless," stating they don't alter the fact that "President Trump was right." Meanwhile, the authors emphasize that businesses remain in a transition phase, with tariff-related adjustments ongoing and further analysis planned as trade patterns evolve.
Trump Defends Tariffs Amid Widening Trade Deficit
During a visit to Georgia on Thursday, Trump toured Coosa Steel and reiterated his defense of the policy, calling tariffs "the greatest thing to happen to this country." He expressed disbelief that the US Supreme Court might review their legality. Despite administration claims that higher duties would narrow trade imbalances, newly released US Census Bureau figures show the trade deficit widened by $25.5 billion last year, reaching $1.24 trillion.
Administration Officials Criticize Independent Research
Senior officials continue to frame tariffs as economically positive. Kevin Hassett, director of the White House National Economic Council, sharply criticized separate research from the Federal Reserve Bank of New York, which found nearly 90% of tariff costs are borne by domestic businesses and consumers. Hassett labeled the paper "an embarrassment" and "the worst paper I've ever seen in the history of the Federal Reserve system."
Tariff Increases and Economic Impacts
According to New York Fed researchers, Trump raised the average US tariff rate to 13% last year, up from 2.6%. The administration justified elevated duties on products like steel and household fixtures on national security grounds. In April 2025, Trump invoked an economic emergency declaration—unveiled at an event branded "Liberation Day"—to implement a broad baseline tariff, initially unsettling financial markets before volatility eased as rates were adjusted and trade negotiations pursued.
Economic Strain and Inflationary Pressures
While inflation has remained relatively stable during Trump's current term, economic indicators show signs of strain. Hiring growth has slowed markedly, and academic economists estimate consumer prices are approximately 0.8 percentage points higher than they might have been without the tariffs. The Supreme Court is expected to determine whether the emergency declaration exceeded presidential authority.
