Trump’s tariffs cost companies $1.2 trillion as consumers feel the pinch, study reveals

US President Donald Trump’s tariffs are leading to a trillion-dollar increase in corporate expenses this year, much of which is being passed on to consumers through hiked prices of products, according to an S&P Global report published Thursday.

Companies are expected to lose approximately $1.2 trillion more in 2025 than initially forecast, as the picture on trade and tariffs has shifted dramatically, according to the report.

Financial revisions and lost profits

S&P revised its 1 January expenses forecast based on the analysis of roughly 9,000 public companies. The recent estimate now projects total company expenses for the year will reach $53 trillion, Fortune reported.

Key factors behind this revision include tariffs, wage increases, energy costs, and rising capital expenditure, particularly in AI infrastructure.

The report highlights a sharp contraction in “global corporate” margin expectations. Sell-side analysts covering the largest global retailers like Walmart, Amazon and Costco Wholesalers estimate a combined $907 billion in lost profit.

The consumer burden

Of the estimated $907 billion in lost profit, the report finds that roughly two-thirds, or $592 billion, is being passed to consumers via higher prices. The remaining one-third or $315 billion, is absorbed internally by companies through lower earnings.

The report shows that “real output” is declining, meaning fewer goods are being produced by these companies.

Beyond the 9,000 public firms analyzed, the report includes projected expense increases of about $155 billion for “uncovered public firms” and $123 billion for private equity- and venture capital-backed firms. Combined, this brings the total incremental cost to $1.2 trillion in 2025.

Debate on income inequality

A central debate has emerged over who bears the brunt of tariff-driven price hikes. Trump-appointed Fed Governor Christopher Waller argued that the effects of tariffs on inflation have been modest and mostly felt by higher-income households.

However, analysts from TS Lombard disagree. They argue that the economic fallout from tariffs is starkly divided by income, with the wealthy largely insulated, while lower and middle-income households bear most of the hardship.

Christopher Hodge, an economist at Natixis CIB Americas, a global financial institution, told Fortune that tariffs take a larger percentage of income from lower earners since low—and middle-income households spend a major chunk of their income on goods—many of which are now tariffed—rather than services.

“Tariff-sensitive categories—like furniture, apparel, electronics, and household appliances—are heavily consumed by younger families and middle-income households outfitting homes and raising children,” he added.