Midsize U.S. businesses could face a $82.3 billion to $187.7 billion hit if President Trump sticks to his sweeping tariff plans — creating the potential for price hikes, layoffs and hiring freezes for many employers, according to a new analysis.
The JPMorganChase Institute released two reports Wednesday on the impact Trump’s import taxes will have on companies with $10 million to $1 billion in annual revenue — a category that covers about a third of the nation’s private-sector workforce.
“Midsize firms are an important and often overlooked segment of the economy,” the institute’s researchers wrote in a release on the findings in the companion reports. “Together, these reports offer a clearer picture of how recent tariff changes are affecting midsize firms across industries and regions in the U.S.”
Trump launched his massive “Liberation Day” tariff overhaul on April 2, but his administration agreed to temporarily pause the hikes on most countries. The moratorium delaying the “reciprocal” tariffs is set to expire next week.
“The tariff rates that have been announced so far have varied widely from one country to the next, and we have seen that policy can shift quickly,” the JPMorganChase Institute’s researchers noted. “Vulnerable midsize firms may need to adapt their business models, which could affect their customers, other businesses and their regional economies.”
“If they struggle, it may cause ripple effects for other businesses and their communities,” they added.
White House press secretary Karoline Leavitt said last week that the July 8 deadline is “not critical” and could be extended. Still, the institute analyzed the impact under scenarios based on hikes the president previously outlined, possible negotiated levels with major trade partners and the retaliatory tariffs other countries have proposed.
The Trump administration agreed to a 55-percent tariff rate on Chinese imports in a trade truce struck in May after several rate hikes.
“Since midsize firms have an outsize reliance on Chinese goods, making up 20.9 percent of their total 2022 goods imports, a rate of 55 percent still leads to substantial costs for some segments of the middle market,” the researchers noted.
When analyzing under a hypothetical 10-percent universal import tax and higher rates of 55 percent on China and 25 percent on Mexico and Canada, the institute concluded businesses would face an $82.3 billion — or $2,080 per middle market employee — cost increase from tariffs.
“This represents about 3.1 percent of the average annual payroll of a U.S. midsize firm,” they wrote.
Under an analysis of all tariffs rising to Trump’s full “Liberation Day” levels, the researchers found total direct tariff costs to midsize firms would grow more than sixfold to $187.7 billion, or $4,740 per employee.
“An annual tariff cost of $4,740 per employee means that midsize firms would, on average, face additional costs of over 7 percent of their payroll,” they wrote.
The institute also highlighted that the way the president moves forward with trade agreements and tariffs could have a wide range of potential effects on U.S. businesses.
“If paused tariffs go into effect again, they could generate major upfront costs for
the middle market, while the impact may be modest if future trade deals lead to further tariff reductions from current rates,” they wrote. “Though tariffs could stimulate domestic investment and benefit some firms due to reduced international competition, they would lead to significant cost increases for others.”
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